The “existential” threat of re-imposed European wine tariffs
By Jeff Siegel
Former President Donald Trump’s call for renewed tariffs on European wine if he’s elected president were met with a flurry of adjectives Thursday afternoon during a U.S. Wine Trade Alliance media roundtable.
And none were optimistic.
How does “devastating” sound? Or “scary?” Or “near impossible?” And even “existential” — as in, another round of 25% tariffs would threaten the future of independent restaurants and wine retailers throughout the United States.
“Imports are a critical piece of the wine business in the United States,” said Ben Aneff, the managing partner of Tribeca Wine Merchants in New York City and president of the trade alliance. “And the tariff would hit mostly small and independent companies in the U.S.”
Tariffs hurt American wine
The alliance describes itself as “a leading advocacy organization dedicated to protecting the interests of the U.S. wine industry by working to eliminate tariffs on imported wine.” Its membership includes importers, wholesalers, retailers, restaurants and producers, focusing on independent and family-owned companies.
The six panelists represented a cross-section of that membership: Restaurateurs Andy Fortgang of Le Pigeon and Canard in Portland, Ore., and DeWayne Schaff of Celebrations in Cape Girardeau, Mo.; retailer Gregory Stokes of The Bottle Shop in Columbus, Ohio; and wholesalers Harry Root of Grassroots Wine in Charleston, S.C., Eric Faber of Cutting Edge Selections in Terrace Park, Ohio, and Alex Krobin of Thirst Wine Merchants in Oklahoma City, Okla.
Aneff and the six panelists described a post-tariff U.S. wine world, given a Trump election next month, that could shutter thousands of U.S. businesses and throw at least that many more out of work — including domestic producers and those that didn’t seem to have much to do with imported wine. That’s because many small U.S. wineries aren’t big enough to attract the handful of large distributors that dominate the U.S. market, and they depended on the small wholesalers that would be most hurt by the resumption of tariffs. If the tariff forced these wholesalers to close or cut their portfolios, small U.S. producers would lose distribution and also suffer financially.
That’s just one reason, said Aneff, that the WineAmerica and Napa Valley winery trade groups opposed reinstating the tariff.
Root was blunt: Many small and independent wholesalers like his were already facing hiring freezes and similar economies given the current wine climate; a tariff would almost certainly push many over the edge. Root said his capital costs would increase at least 15% to keep the same level of inventory, even though the quality would probably decrease since he would have to replace many of the wines that the tariff priced out of his range.
More trouble ahead
Among the other points:
• A tariff, thanks to the three-tier system, harms U.S. wine businesses more than those in Europe. This was evident during the first round of tariffs, when U.S. importers were stuck paying the tariff bill instead of European producers. In fact, said Faber, Ohio law forced him to pass along the entire cost of the tariff; he couldn’t eat some of it to try and keep his prices competitive.
• Consumers, faced with higher imported wine prices, don’t switch to domestic wines, but opt for less expensive beer or cocktails. Fortgang said he saw this regularly, when customers switched to two or three $10 beers instead of a $60 bottle of wine if wine prices were too high. In this, wine might account for as much as one-half of his beverage program’s profit.
• Imported wines are unique, and have few substitutes domestically. For instance, it’s expecting too much that a diner who wants to buy a Barolo at an Italian restaurant will choose a Napa Merlot. “You just can’t pivot to something else,” said Krobin.
All of which is something the seven men hoped they didn’t have to deal with next year.
_______________________________________________________________________________________________________________
Jeff Siegel
Jeff Siegel is an award-winning wine writer, as well as the co-founder and former president of Drink Local Wine, the first locavore wine movement. He has taught wine, beer, spirits, and beverage management at El Centro College and the Cordon Bleu in Dallas. He has written seven books, including “The Wine Curmudgeon’s Guide to Cheap Wine.”
