Tariffs

Trump's Proposed European Tariffs Would Be Terrible for People Who Like Good Wine and American Jobs

A 100 percent tariff on European wines could all but wipe out the industry.

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To understand the self-defeating absurdity of President Trump's trade war, consider that much of the U.S. wine industry is now in peril because of a squabble with Europe over…airplane subsidies. Somehow, it's even stupider than it sounds. 

In October of last year, the Trump administration slapped a 25 percent tariff—a tax paid by Americans—onto a variety of European goods, including single-malt scotch, and French, German, and Spanish wines containing less than 14 percent alcohol by volume. That tax has been absorbed to some extent by distributors and sellers, but also appears to be pushing up prices for consumers: Anecdotally, single-malt scotch prices appear to have inched up in some stores recently; tariffs likely played a role. 

In response to a French tax on the activities of big tech companies, the U.S. Office of the Trade Representative (USTR) in December threatened further escalation in the form of a 100 percent tariff that would hit wines of all kinds, as well as numerous other European goods, from olives and cheese to Dutch ovens.

According to Vinepair, the USTR saw the offending tech tax as "unfairly target[ing] U.S. internet firms while sparing French companies." The 100 percent tariff proposal was, at least in theory, a threat to respond in kind, hitting French businesses in hopes of protecting American firms.   

The new tariffs haven't gone into effect yet, and it's possible that they never will—or that they will be implemented in some lesser form. But if they were to go into place in full, they would represent something close to an existential threat to the American wine trade. The likely result would be significant job losses amongst sellers and importers, a sizable reduction in the domestic availability of European wines, and massive price increases for imported wines that would still be available.

The wine business is, by all accounts, a small and tightly knit community of producers and importers and sellers; many importers are small, family-run businesses that would have to lay off staff or even close entirely. Job-loss estimates run anywhere from 10,000 to 17,000, with heavy losses falling on distributors. Americans would lose access to a huge array of wine offerings from Europe, as winemakers would simply stop selling in the U.S. market. Affordable wines in the $15 and under range that appeal to more casual drinkers would probably be hardest hit

Once supply chains break down, as European producers take their business elsewhere and domestic importers and sellers close their doors, they can be very hard to repair. Even if the tariffs were eventually lifted, there's no guarantee that the wines, or jobs, would come back. The tariffs might not be a death blow to imported wine, but they could cripple the industry for years. 

This is the stupid and entirely predictable reality of how trade wars inevitably play out across the economy: A long-standing international fight over airplane subsidies, exacerbated by a mostly unrelated squabble over the foreign taxation of Facebook, threatens to raise prices for American consumers, limit their choices, and destroy domestic businesses and jobs in the process—all in the name of protecting American businesses. France's tech tax is indeed punitive, but harming American businesses and consumers in response is a rather odd way to strike back. 

It's possible that there might be some substitution effect, with American wines filling in for European offerings. But any substitution effect would be limited at best: As one wine store owner told The Wall Street Journal recently, "You can't just replace French Burgundy with domestic Pinot Noir. It's a different consumer." 

Nor could a 100 percent tariff be reasonably described as a proportional response. Wine industry representatives say the tariffs would harm American businesses much more than their French counterparts. One store owner told Reuters "his business in downtown Manhattan had survived the 9/11 terror attacks, the 2007-2008 global financial crisis, and Hurricane Sandy, but its fate would truly be in jeopardy if the tariffs were put in place." Another wine merchant told The New York Times the proposed tariffs were the "greatest threat to the industry since Prohibition." This may be hyperbole, but there is little doubt the consequences would be severe. 

Tariffs are a form of avoidable self-sabotage, and the best evidence so far shows that Trump's trade war has hurt exactly the people it was supposed to help. Yet Trump and his administration have persisted in waging, and threatening to wage, an economic war that Americans are guaranteed to lose. 

If there is good news, it's that this particular stupidity can still be avoided. There's no timeline for the increased tariffs to go into effect. And the USTR will take comments on the proposal through January 13. But whatever happens with these particular tariffs, the larger stupidity of Trump's trade war is, sadly, likely to continue. 

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  1. Suderman….I am sure Napa Valley can replace EU wines. We’ll just have to tough it out for a few years until the Frogs come to their senses on digital taxation. EU wines are good, but not that good.

    1. Call me when CA can produce a decent riesling

      1. Rieslings are for children.

        1. And old people. My grandmother loved any wine from a blue bottle.

          1. Maybe she was drinking her hair dye?

            1. She was grey for fifty years. Never dyed her hair.

              1. Did you check the color of her tongue?

                  1. Well, maybe you should have.

                    1. Gift horse, ninety year old woman… I ain’t looking either in the mouth.

            2. Seriously, do you know what a Riesling is? If not it’s a sweet wine that is traditionally sold in blue bottles. Hence my statement. People who know more about wine than dying their hair know these things.

              1. still a Barbicide joke in there.

                1. I get it now. Speaking of.. I need a haircut.

              2. I would say more rieslings are not dry than are dry

          2. Then she is not drinking Riesling. The plonk in blue bottles and stuff called Blue Nun or Liebfraumilch is Müller-Thurgau.

        2. LOL. Your loss.

          It’s a variety that more transparently expresses where it was grown than any other, including Pinot and Chardonnay. It makes wine that varies from bone dry, yet refreshing, a perfect companion for complicated dishes, all the way to absolutely sublime dessert wine that rivals fine perfume with the complexity of its scent.

          More for me.

          1. I was doing some CA-nationalist joking. CA Rieslings are too sugary, in my experience. We’re best at Chardonnays, IMHO.

            But in fairness, this is the wine for the kids.

            1. Agreed on most of them, but Navarro’s is really worth your time. They make Rieslings with a wide range of sweetness levels.

              Honestly, CA and other US areas have really stepped up their game in the last 10 years or so, with Riesling. They’re still trying with Chenin.

      2. NY State does some halfway decent riesling. I said halfway, Ok? 🙂

      3. Kevin, try Navarro. Margerum makes a decent one too. Or Eroica from CSM, or some of the Finger Lakes producers.

        The US can’t make a copy of a MSR Kabinett because nobody can, but select producers can make quite good Rieslings.

        No, the wine import industry is not going to die because they can’t get French wine, Suderman. It will, even more than they already do, look to other countries to make up the slack, like Greece, Turkey, other EU countries. And it will be annoying for people who like Burgundy, but Chinese demand was ruining the affordability of that area long ago.

        1. This tariff schedule is about as clear as mud. If the items in Annex 2 at the Federal Register comment area are the goods to be subjected to the 100 percent tariff, then Greek wines, and pretty much everywhere else on the Continent, would be subject to it. Switzerland wouldn’t count. Neither would Turkey, Macedonia, or Albania.

          Guess the importers better learn Spanish or Xhosa.

        2. I’ll check those out, I’m super picky though, even within the MSR region I’m still checking labels for something grown along the Mosel between Trier and Cochem lol

          1. We can be friends. I’d wouldn’t even go that far downstream, stopping at Enkirch, excepting rare producers like Heymann-Lowenstein. Though going a bit more upstream, at least into the Saar and Ruwer valleys. Cochem and Zell are awfully pretty though. ‘Course so is the Mittelrhein.

            I think Terry Theise’s prose is a bit overblown, but he makes great Riesling selections.

      4. The Finger Lakes in NY makes excellent riesling. Australia’s not bad.

  2. Nooooooooooooo! Not European cheese!

    Seriously. Anthony Bourdain (fuck you for killing yourself, asshole) said that the worse a cheese smells, the better it tastes. I’ve found some washed rind cheeses from France lately that smell like feet, or a dumpster, and are otherwise so foul in stench that I must wrap it, bag it, then put it into a container, and it still makes my fridge smell disgusting. Next time I’m using a mason jar. But damn, I love my stinky cheese! Please Trump, don’t make it more expensive!

    1. I’ve got my daughter on a stinky cheese kick. She actually smelled the last one I bought as we were walking past the display. The stench was so foul that she could smell it from feet away. So she grabbed it, handed it to me, and I said “Holy fuck this smells disgusting! I’m taking a wedge home!” Didn’t impress the pretty lady walking behind us.

      It said it was a Camembert from France made from fresh milk. But I normally associate that cheese with a white rind. The rind on this one was orange. And did I mention that it smelled absolutely disgusting?

      So good. Brought it to a Christmas get-together and ended up giving away half of what was left because my family thought it was the bomb.

      Stinky cheese. Mmmmmmmmmmmm……..

    2. Jasper Hill makes a few washed rind cheeses in New England. I’m sure there must be others that are lesser known.

      Not going to replace Pont-l’Évêque, or Epoisses. Or hell, Cabrales, real Parmigiano, or Idiazabal. But better than nothing.

      I guess get your Jamon Serrano or Iberico, and your Scottish salmon before it’s gone.

      1. I’m still a novice in the world of cheese. There is one with an orange rind from Vermont that I like. There is a shop I go to where I tell them what I’ve tried and they suggest new things. Haven’t been there in a while.
        As far as salmon goes, I cure my own. Equal parts sugar and salt that soon turn into goo. Good stuff. The salmon, not the cure.

        1. I have a Salmon Nicoise Menage a Troise, which had cured salmon, poached salmon and smoked salmon all on top of greens. Super easy to make because the only one requiring active cooking around serving time is the poached salmon. It is a great mothers day meal because it is light, while also letting you break out the smoker.

    3. Yeah, I love a good stinky washed rind cheese as well.

    4. Maytag makes excellent cheese.

  3. I’m not sure what the answer is here. It seems clear to me that European markets, among others, are tariffing the shit out of us, so we should respond… Somehow. Of course tariffs hurt the consumers of the foreign products, but they must also hurry the sectors and markets they’re designed to hurt, otherwise we’d be along the French to tariff tech companies harder.

    1. Well for starters, Congress should be authorizing this either directly or giving the Trump admin a limited scope to work with (sunset clause, can only apply to these specific products (or all) from this country or countries).

      1. True. It’s a puzzlement, to be sure. 535 power hungry douchebags in a swamp keep giving their powers to someone else.

    2. Should we respond?

      Why?

      If we do decide to “open up foreign markets” the only proven method is a gunboat.

  4. Oh, and I’m not drinking any fucking Merlot!

    1. Check out Miles Raymond over here!

      1. With his bottle of French merlot. (Well, half and half with cab franc.)

  5. I think we all know that the real issue here is if we get rid of Euro-wine, then the Reasonettes will have nothing to drink at their DC cocktail parties.

    1. Make the tariff 200%

      1. I like what your thinking, but, and now hear me out here… what if we made it…. 300%? Just to make sure.

        1. LOL…done. Guess Mangu-Ward will have to cough up more dough.

    2. I always pictured Robby as a French martini guy.

  6. Anyone who drinks wine is gay or European.

    There, I said what everyone was thinking.

    1. Well it is suderman.

    2. I like to think of myself as the Ricky Gervais of the Reason Golden Globes comment section.

      1. You’re a cross-dresser?

    3. I always pictured Suderman as a daiquiri guy.

  7. Why drink European swill when we have Trump wine Suderman. There isn’t a better wine. Some people say it’s the greatest ever.

    1. Some people say it’s the greatest wine ever, but they’ve been drinking it nonstop since 7 AM.

    2. Wow, Trump Wine is actually a thing.

      I wonder if Trump drinks Trump wine while eating his Trump steak cooked well done and drenched with ketchup.

      Nahh, he probably drinks real wine and eats real steak. The Trump branded stuff is for the suckers.

      1. Trump doesn’t drink, drug or do anything fun other than screwing hot women.

        1. He supposedly takes a lot of
          Pseudoephedrine. The European kind because it’s stronger. I notice he’s not putting a tariff on that.

  8. There are US-produced wines which compare with anything the Euros can produce. Period. And as far as good, inexpensive wines, maybe even more so. I seldom even bother with European wines. Even so, this tax is silly and non-productive.

    1. Agreed. I have a 500 bottle collection. Maybe 20 are European. Even my French father-in-law admits US wines are equal to and often better.

    2. There’s also lots of good wine from South America.

    3. The counter argument is that you can find some really good, inexpensive French wines that Americans haven’t discovered.

      This tariff screws that up.

      But the WHOLE POINT of the tariff is to discourage me from buying it.

  9. And like all tariffs, they’d be terrible for Reason.com’s billionaire benefactor Charles Koch. That’s what really matters.

    #HowLongMustCharlesKochSuffer?

  10. There is so much wrong with this piece, it’s hard to know where to begin. I suppose we should start with the observation that just because tariffs aren’t a good solution because they inhibit markets and trade, this doesn’t mean that letting European countries effectively subsidize Airbus at the expense of Boeing or European countries gouging American tech companies with bullshit taxes without objection is especially pro-trade either. I’m looking forward to seeing the terms of Trump’s phase one agreement that the Chinese are coming to sign next week. It might well contain a serious solution to the anti-trade policies of China in regards to insisting that American companies forfeit their intellectual property as a precondition for access to China’s market. If we whine too much about how calling out the Europeans on their trade barriers is necessarily awful and pointless in the same week that Trump bring China to its knees on forced technology transfers, people may start to question our credibility.

    Because we oppose tariffs is no reason to pretend that European practices are acceptable.

    1. Because we oppose tariffs is no reason to pretend that European practices are acceptable.

      It’s the same token by which I oppose war as a primary tool of diplomacy, but am absolutely willing to admit that there are times when you’ve accomplished all you’re going to accomplish by talking and the only way to fix a problem is by kicking someone’s ass.

      We live in a complicated world that does not fit well with ideological absolutes.

      1. Some problems don’t actually need to be solved.

      2. It’s the same token by which I oppose war as a primary tool of diplomacy, but am absolutely willing to admit that there are times when you’ve accomplished all you’re going to accomplish by talking and the only way to fix a problem is by kicking someone’s ass.

        You’re fine with initiating hostilities when diplomacy fails, even if the other isn’t hostile to you?

        That’s what bullies do.

        1. Europe is economically hostile towards the US. China is economically and militarily hostile towards the US.

      3. “We live in a complicated world that does not fit well with ideological absolutes.”

        This line right here! If we as a public could understand this simple concept, much of the polarization and politicization that we have going would be minimized.

        1. I think most people agree with this principle.

          We’re all prepared to compromise the other guy’s ideology.

      4. Hear, hear = We live in a complicated world that does not fit well with ideological absolutes.

    2. letting European countries effectively subsidize Airbus at the expense of Boeing

      I get it. It isn’t fair that the Europeans tax their people and as a result make air travel cheaper for other people. The fair thing to do is to tax those things and make them more expensive. Must protect us from cheap stuff. Yeah. Totally.

      1. It isn’t fair that the Europeans tax their people and as a result make air travel cheaper for other people.

        If only it were that simple.

      2. After the 737 Max debacle, Boeing will declare bankruptcy and beg taxpayers for a bailout. ‘Ef Boeing.

      3. That isn’t what’s going on here.

        Airbus was a government funded consortium by the governments of France, the UK, and West Germany.

        Airbus’ biggest customers were long government owned airlines in Europe.

        Because I’m pro-trade and anti-tariff doesn’t mean I need to pretend that the Europeans’ practices on this are pro-trade when they aren’t.

    3. We subsidize Boeing.

      Why do I care if they gouge tech companies with taxes? The solution is for the tech companies to withhold their services.

    4. This is where I’m at. I’m not a fan of tariffs and would much prefer free trade. But what do you do when the other side isn’t playing by the same free trade rules. I am not understanding why we in the US have to accept the awful behavior of others without responding to it.

  11. A number of challenges.

    US Wine production is inelastic in the short term. It takes years for a wine to mature.

    Also, pricing in the wine industry is much like pricing in the art world. It’s mostly driven by “perceived” value rather than some intrinsic value, or cost of production. Yes, there are qualitative differences between wine produced for a $5 price point and one produced for a $50 price point, but there are lots of studies showing that people prefer a $30 wine to a $20 wine simply based on the price tag. You can swap the price tags and swap the preference.

    And yes, the wine industry has a lot of small players at every stage of production and distribution, so this could fuck up the industry for years.

    Seems we have come a long way from planning our tank invasion of Europe so that we would spare the best vineyards from harm…

  12. We should unilaterally eliminate all tariffs and subsidies.

    1. As far as taxes go, I’m kinda OK with tariffs in a way. It’s the federal government’s job to police the border, so paying for it by taxing goods that cross that border, an entry-fee so to speak, isn’t a terrible idea. Especially because it’s an avoidable tax. Don’t wan to pay import taxes, don’t buy imports. Easy peasy. But that’s in a world without federal income tax and payroll tax. If tariffs were the fed’s major source of income, and they kept to their legitimate job of policing the border, then I wouldn’t have much to say. Using them for politics and social engineering is a different matter.

    2. We should unilaterally eliminate all tariffs and subsidies.

      If that includes all individual tariffs (i.e. income and capital gains taxes) and subsidies (i.e. welfare and government service), I’m on board.

      Otherwise, if you only unilaterally eliminate import tariffs and corporate subsidies, you’re simply shifting financial burdens around, mostly punishing wage earners.

    3. Now THAT is a truly libertarian response.
      Tariffs just raise the U.S. cost of living and cost of production, period. Subsidies transfer money from people who earned it to those with more political clout.

  13. Buy lots and lots of New Zealand wine. Problem solved. Not to mention it’ll help me out with my shares in various NZ Winegrowing companies.

    (Or Australian, or Chilean, or South African, or Argentine or – for the exceptionally brave – British wine).

    Thxkaibai.

    1. The British stuff will be subject to the tariff. Pity, I’ve heard some of their sparklers are tasty. Pricey already though.

    2. Israel has some good wines now as well. Used to get some good stuff from Lebanon bekaa valley.
      Still the tariff is another ridiculous move. Why should I pay more for what I want.

      1. Yes! I have had several. Fortunately, a shop rite near me has a phenomenal Kosher Experience area, and an attached liquor store.

        Golan Height Winery is very good. Good reds.
        For fun, I tried the ‘Rashi’ label of another Israeli winery. Pass on this.

  14. “Anecdotally, single-malt scotch prices appear to have inched up in some stores recently; tariffs likely played a role.”

    Well, hard to argue with this drivel.

    1. Yeah. That demand for all manner of whiskeys has gone ballistic has nothing to do with it. It’s so bad that many Japanese producers are no longer putting age statements on their hooch.

  15. 1. TDS sufferers fail to understand that Trump voters do not all slavishly approve of Trump and/or his policies. Some of them are just happy that he unerringly gets right up the noses of the people who desperately need to have a large orange Trump up their nose. To such folk, every sentence of Suderman’s article screams “Yes, more ! 200% ! ”

    Trump is going to make Euro-wine swilling swamp critturs and pointy heads very indignant. Oh noes !

    2. All the same, Trump is doing this wrong. The Euro taxes are aimed at Trump’s deadliest political enemies – the Californian Big Tech mafia. The smart move would be to let the Euros double the taxes, so long as they remit 50% of the proceeds to a special “Mexican Border Wall Construction Fund.”

    1. At what point are people outraged about the obvious conflict of interest? We are letting the Trump family levy tariffs on their wine competitors and leaving consumers to pick up the tab.

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  17. Woop dee doo: Put the bottle in a paper bag and not one person in a thousand can tell the difference between a $15 domestic wine and a similar $50 imported wine. Blind taste tests have repeatedly proven this: Once you get past the worst of the swill, you’re paying for the label, not the contents.

    Won’t effect me at all, anyway: I drink mead, and brew it myself. (I make a mean blackberry melomel, and my cranberry orange is a hit around the holidays.) It’s the only way to drink exactly what you want, instead of somebody else’s idea of what would be good. Usually somebody who’s so jaded they think vinegar tastes good.

    On the more general question of tariffs, Reason is deliberately obtuse about what is going on here: The EU has for years been subjecting US imports to oppressive levels of taxation, or keeping them out by other means. (Such as bogus rules against GMO crops.)

    Nobody wins a war? No, the aggressor wins it, if the other side doesn’t fight back. Trump is trying to persuade Europe to drop their trade barriers by making it clear that retaliation is no longer off the table. If he succeeds, we’ll all win. If the prospect of winning is real, it’s worth a bit of temporary pain.

  18. >You can’t just replace French Burgundy with domestic Pinot Noir. It’s a different consumer

    Thus admitting that it’s not the wine, it’s the snobbery. Wine snobs pay more? My heart bleeds … not. California, Washington, and Oregon make pinot noir as good or better than anything French, except maybe the grand crus, and who can afford those anyway?

    This comment not approved by Silicon Valley brain slugs.

  19. A few comments need to be made in response to the tariffs article. I, for one, am a huge proponent of free trade, no tariffs whatsoever. How ever the European Union is like a thief in the night, stealthily robbing from the citizens of the world by imposing tariffs on our goods at the expense of our workers. As the article notes that French wine could take its business elsewhere and we would be holding the bag is not necessarily true. Where would they sell their wine? To the Mid East? I think not. To South America, South Africa or Australia? Also I think not. They all have thriving wine companies in their countries and they would be less able to import and sell French wines than is true in America, where the incomes are higher.
    The French have shown their mettle in the European union by vetoing many deals in order to protect their various interests to the detriment of their citizens. Protectionism will sink France into an abyss as a result of her policies. The time has come to call France’s hand on this one-sided policy.
    I think that Trump is right to stand up to France and other countries and let’s lower prices for the people’s of the world by insisting of zero tariffs.

  20. Ya — Making it harder to buy foreign labor will CERTAINLY cause domestic jobs to perish…. /s.

    How stupid can people get.

  21. What a silly analysis and argument. Lacking the time to address all of the inaccurate representations, I’ll focus on just one paragraph.
    “Once supply chains break down, as European producers take their business elsewhere and domestic importers and sellers close their doors, they can be very hard to repair. Even if the tariffs were eventually lifted, there’s no guarantee that the wines, or jobs, would come back. The tariffs might not be a death blow to imported wine, but they could cripple the industry for years.”
    A nice bit of ivory tower idealism but no relation to the real world. According to 2017 numbers for French wine exports (reference provided at the end) the US makes up 18% and is by far the largest importer of French wines. The UK is 2nd at 12%. No other country breaks double digits. The idea that French producers can simply take 1/5 of their output “elsewhere” is either bats*t crazy or a sign that the author was too lazy to research the basis for their unsupported argument. Yes, the French-US export market would go into hibernation and potential price cuts could help relieve some of the obvious resulting sudden over-supply. But the biggest change would be a huge surge in unsold inventory of French wines. Assuming that at some point France sees the error of its ways and reverses its attack on US digital content (and no it’s certainly NOT just Facebook but yes the tax was written in a way meant to specifically target the US) and the wine tax gets rescinded, then the export flood gates would reopen. Companies that were able to weather the hibernation would come back and new ones would easily replace those that didn’t. Both the wine and the jobs would return.

  22. All tariffs raise the cost of living for U.S. consumers (washing machines) and/or the cost of production for producers (steel). Cut country-specific tariffs are least damaging precisely because substitution is much, much easier than this article suggests. Excellent wine doesn’t just come from CA-OR-WA-NY but also South Africa, Chile, Argentina, Australia, New Zealand, etc. If France and – more importantly- Italy lost much of the U.S. market they would have to cut prices deeply (offsetting much of the tariff for consumers) and later reduce capacity. A foolish tragedy, to be sure, but not a huge one – certainly not for U.S. wine merchants or restaurants.

  23. All tariffs raise the cost of living for U.S. consumers (washing machines) and/or the cost of production for producers (steel). But country-specific tariffs are least damaging precisely because substitution is much, much easier than this article suggests. Excellent wine doesn’t just come from CA-OR-WA-NY but also South Africa, Chile, Argentina, Australia, New Zealand, etc. If France and – more importantly- Italy lost much of the U.S. market they would have to cut prices deeply (offsetting much of the tariff
    for consumers) and later reduce capacity. A foolish tragedy, to be sure, but not a huge one – certainly not for U.S. wine merchants or restaurants.

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