It’s already been an election season for the books, and no one knows what might happen next.
By Michael Kaiser
While wineries are picking grapes and making next year’s vintage, the rest of the country is focused on the 2024 Presidential Election. It has certainly been an eventful year leading up to this point.
On one hand, we have a candidate who has already been President, Donald Trump, who is running for president for the third time in the last eight years. That is not what makes his candidacy unique, though. For the first time in history we have someone who has been convicted of a felony running for President of the United States, with more potential convictions coming.
On the other hand, we have a candidate who was not even running for president as recently as mid July. Vice President Kamala Harris became the Democratic nominee when President Joe Biden stepped back from pursuing a second term. It’s already been an election season for the books, and no one knows what might happen next.
What’s at Stake
As with every presidential election year, the entirety of the House of Representatives is also up for re-election. Not only that, one-third of the Senate is up for reelection as well. The Republican majority in the House and the Democratic majority in the Senate are both razor thin, and there is a chance that one or both of them could flip. There are eight different possible outcomes to the 2024 election:
- Harris wins with a Democratic House and Democratic Senate
- Harris wins with a Democratic House and Republican Senate
- Harris wins with a Republican House and Republican Senate
- Harris wins with a Republican House and Democratic Senate
- Trump wins with a Democratic House and Democratic Senate
- Trump wins with a Democratic House and Republican Senate
- Trump wins with a Republican House and Republican Senate
- Trump wins with a Republican House and Democratic Senate
Each one of the scenarios offers a different outcome for legislative initiatives in the 119th Congress. If you’ve been following the news out of the Capitol over the last two years, you’ll know that a Biden White House with a Democratic Senate and Republican House has not been able to accomplish much of anything. In fact, it’s barely been able to do the minimum of what is required. As of this writing, we are facing another possible federal government shutdown because of our leaders’ inability to pass the necessary 12 appropriations bills in time. Additionally, legislation such as the Farm Bill has been stalled for more than a year. If we continue to have a government divided the way it is, the pattern of moving from self-created crisis to self-created crisis will continue.
Harris or Trump: Who is Better for Wine?
Unlike the 2020 election that featured two teetotalers facing off, we once again have a wine drinker running for president. President Biden and former President Trump both famously do not consume alcohol. Trump does have a winery bearing his name in Virginia (owned and operated by his son, Eric), but he does not imbibe. Vice President Harris, on the other hand, is known to belong to at least one wine club and does consume alcohol. It must be noted that none of that should have any bearing on what their policy stances are.
Trump on Wine
When he was in office, Trump was both good and bad for the wine industry.
Tariffs and Trade. Trump never met a tariff he didn’t like. While they do increase revenue on imported goods, the impact on the domestic aspect of the industry is disastrous. When he was President, his administration imposed a 25% tariff on wines imported from the European Union, specifically from France, Germany and Spain. This led to an added cost for many popular wines from those countries, which led to lower profit margins for importers and retailers.
This seems like it could be good for domestic wineries, but it did have a ripple effect on the industry. Tariffs on American wine exports artificially multiply the end price, depressing consumer purchases and therefore trade interest. Tariffs imposed by the U.S. on imported wines indirectly harm American wineries by weakening wholesalers which American wineries also rely on to distribute their wines.
A natural response from countries the United States imposed tariffs on is to put their own retaliatory tariffs in place. The impacts of tariffs on American wines in the European Union and China are significant. In 2019, when Trump was in his first term, American wine exports to the EU — the domestic industry’s largest market — totaled $427 million. In China, 2019 sales totaled $39 million. Tariffs that decrease these sales will force the wines back into the U.S. domestic market, causing a glut and depressed prices for both wine and grapes.
If elected this Fall, Trump has said he will go even harder with tariffs to pay for some of his domestic policies, such as tax cuts and other domestic programs.
Taxes. Donald Trump was President when the Craft Beverage Modernization and Tax Reform Act (CBMTRA) became law. The first version of the bill was part of the Tax Cuts and Jobs Act in 2017, which included a two-year version of the CMBTRA. In 2019, the bill was temporarily extended for another year. The bill was not a huge priority for the Trump Administration, but it was a tax cut, which it loved.
However, we would be remiss if we didn’t mention that the bill almost didn’t become law in 2020 because of a veto threat against the massive omnibus and tax extender bill at the end of the year. The industry collectively held its breath while the president had what can only be described as a temper tantrum. In the end he signed the bill, but it was a stressful few days where it looked as though the wine industry was potentially facing a massive tax increase. We could see more business tax relief in a second Trump term.
Regulations. The Trump Administration worked to ease the regulatory burden for businesses in its first term. This included the recommendation to change the 2020-2025 US Dietary Guidelines and reduce the acceptable amount of drinks for a man from two drinks to one drink per day. It also instructed all federal agencies to pause regulatory actions that were in-progress to allow time for re-evaluation. This included the TTB; in turn, the TTB did help the industry out with a few new friendly regulations, such as the 355 mL standard of fill for wineries that are canning their product.
Much has been written about what may happen with the dietary guideline process for 2025-2030. A second Trump term would probably lead to another favorable outcome for the industry. All other regulatory actions in the pipeline will also likely be once again paused and reviewed.
Harris and wine
It is a little more difficult to determine exactly what a Harris Administration would mean for the wine industry, though we do have her time in the Senate and as vice president to give us a little insight. As we noted earlier, she is a wine consumer and from California.
Tariffs and Trade. This is a little murky. The Biden Administration has actually kept some of the Trump-initiated tariffs in place, particularly on Chinese goods. The tariffs on EU wines (and their retaliatory tariffs on our wines) have been phased out, but the Biden Administration has not been adverse to tariffs and we expect a Harris Administration to be the same.
Taxes. The hallmark of the CMBTRA was how bi-partisan the Congressional support of the bill was. As a senator, Harris was a sponsor of the bill. The tax reforms she has been in favor of will not directly impact the business aspect of wine. We also don’t expect any changes in the existing excise tax rates.
Regulations. This is where we may see the most significant differences between a Trump Administration and a Harris Administration. Back in 2021, the Biden Administration issued an executive order that mandated the Treasury Department look at competition in the alcohol industry. The report that TTB issued identified problems such as wholesaler consolidation and franchise protections, marketing issues and barriers to entry in the marketplace. Not much has truly been done to effect any change, but we expect a Harris Administration to be friendly for small producers in this vein.
What is unclear is how a Harris Administration will come down on issues such as the 2025-2030 Dietary Guidelines and nutrition/ingredient labeling. We will have to be vigilant on these issues in 2025 and beyond if she is elected president.
Research, Register and Vote
This is merely a cursory analysis of what these two candidates will mean for our industry (there is only so much space in this monthly column). We must also note that much of what each candidate will be able to do as president is dependent on the Congress that is elected. If there is a friendly Congress (that is, one whose party majority matches that of the election winner), they will have an easier time with their policy priorities. Voters will do well to research down-ballot races as well as the headline-grabbing top spot.
As we anxiously await election day, maybe we can spend a few lighter-hearted moments reveling in Come Over October celebrations.
Michael Kaiser
Michael Kaiser is executive vice president and director of government affairs at WineAmerica, which represents wineries and associations from more than 40 states. For more information about WineAmerica and how to get involved, visit www.wineamerica.org.
