Wine Wednesday: Wine Tariffs – What Can We Do To Help?

As many in the industry and in the wider consumer market know, big changes are underway in our industry. I got this yesterday from Alice Feiring’s Newsletter and decided to repost it here. She makes the following case which I agree with 100%:

There’s a serious situation brewing in the wine industry that you might not be aware of. Perhaps you can help.

The United States Government is threatening to impose 100% tariffs on all wines from the European Union.

The reason? A trade war about the EU supporting AirBus. Will tariffs on wine do anything? No. They are useless. The EU will not feel a pinch. There is so much worldwide demand for the good wines and natural wines, that all the good stuff—including all that natural good stuff—that does not come here will land in China (for one), Russia and wherever else. Their corkscrews are ready to absorb our allocations.

On a more global level, let me take this passage note from the mailing sent out by importer Jenny Lefcourt.

These tariffs are really without precedent, but to glimpse a window on the possible disastrous consequences, we could examine the 1930 Smoot Hawley Act. History teaches us that this act hastened the arrival of the Great Depression, extended its length, led to a 65% downturn in global trade, and made imported goods a luxury item only affordable to the top 1% of the American population. What’s more, those tariffs were only between 40–48%, not the 100% tariffs currently in discussion. Smoot Hawley is the reason most of the world’s leaders today favor unregulated free trade.

The more immediate effects? The price of wines to both retailers and wine lovers will skyrocket. We will be asked to pay at least $60 for a wine that was previously $30. Many of us will drink gin instead. But more poignantly, small businesses, wine shops, bars and importers will not be able to withstand the financial punishment. Many will fold.

This is why we—all aspects of the wine industry (as well as all those who want to drink wine)— are asking you to contact your U.S. Congressperson, U.S. Senators and U.S. Trade Representative. Tell them not to support these destructive, impotent anti-consumer tariffs. We’ve made it as easy as possible for you to shout out in protest.

Below are two links that will allow you to email your U.S. House Representative. There’s another to contact your U.S. Senators. Each link takes you to a page where you need only 30 seconds to send a letter to your elected officials. You plug in your zip code and the correct representative will be contacted.

We need as many loud voices as possible. If you could forward this email to your fellow citizens who care or should care, and they act, it just might avert a disaster.

WRITE THE U.S. TRADE REPRESENTATIVE

Below in italics is wording for a letter that you can use to write to the U.S. Trade Representative at the website they have created to take input on proposed tariffs.

  1. Copy the italicized letter below.
  2. Then click on the link at the end of the letter (or above).
  3. Then paste the wording into the box provided for writing commentary. Remember to put your name and address in the area reserved for them.

The Honorable Robert Lighthizer
U.S. Trade Representative
Executive Office of the President
600 17th Street, NW
Washington, DC 20006

Re: Opposition to Tariffs on Imported Wine from the European Union 

Dear Amb. Lighthizer:

I am writing as a customer and consumer of imported and domestic wines that is concerned with the multiple rounds of tariffs that are being imposed and considered on wine from the European Union (“EU”). I strongly urge you not to punish me, or my fellow wine lovers, or hardworking wine retailers, for problems we didn’t cause. It’s unfair at face value. You should punish those responsible. Punishing Airbus and their suppliers and French digital services companies would be much more effective, as well as fair. 

Beginning on October 18, 2019, the U.S. Government imposed a 25-percent tariff on certain French wine as part of retaliatory tariffs against the European Union (“EU”) after the World Trade Organization authorized retaliation for the EU’s failure to comply with WTO rulings on subsidies provided to Airbus. All the while Airbus itself was only issued a 10% tariff. I understand that a 100-percent tariff is proposed on French sparkling wine (consisting mostly of champagne) and that this tariff is part of the Section 301 duties imposed on imports from France as a result of the country’s Digital Services Tax (“DST”). Finally, on December 10, 2019, USTR proposed imposing tariffs of up to 100 percent on all wines from the EU.

Because of these import tariffs, the prices will go up dramatically for wine. Margins on wine are extremely small, and the sale of wine is highly regulated, with virtually every state imposing a three-tier distribution system with markups occurring at each tier of distribution. Thus, a 25-percent tariff on wine imports will likely result in a 50-percent increase and a 100-percent tariff on wine imports will likely result in a 150-percent increase in prices for a consumer like me.

There is no substitute for imports of wine from the EU. Wines from the EU are different from domestic wines and wines from other countries as a matter of consumer taste. In addition, because it takes many years to plant new grape vineyards and allow the vineyards to produce mature fruit that can be harvested to make wine, it will take at least a decade before the U.S. domestic wine industry could ever be in a position to begin replacing wine imports from the EU.

As a wine consumer, I do not understand why individual consumers like me and small U.S. businesses should suffer because of a dispute involving Boeing and Airbus or France’s digital services tax. Retaliatory tariffs on these matters should target Airbus and their suppliers who benefitted from the subsidies, and French digital services companies.

 

One thought on “Wine Wednesday: Wine Tariffs – What Can We Do To Help?

Add yours

  1. Hello Susannah,
    I write the blog: Uprooted – From Grits to Gruyère. I would like your permission to copy and repost this posting. I will give you full credit.
    Thank you,
    wcollins

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