What You Need to Know About the Tariffs' Threat on European Wines

Prohibition in the United States banned the manufacture, transportation, and sale of liquor from 1920 until 1933, increasing illegal production and sale of alcohol. The Twenty-first Amendment to the Constitution ended the national Prohibition on December 5, 1933. After Prohibition, the three-tier system was put in place to regulate the alcohol industry.

In 2020, the alcohol industry still functions with this three-tier system (except for a few states), which means that producers can only sell their products to wholesalers/distributors, and only retailers can sell to consumers. All three-tiers generate revenue from their wine sales. Think about this for a minute. Your wine is marked up three times before it even lands on your dinner table.

Now how would you feel if you have to dish out $40 for a bottle of your favorite rosé from Provence that cost $20 in 2019? Or $16 for a glass of wine that used to be $8 at your local restaurant? Not liking the idea? Neither am I!

In October 2019, the current administration implemented 25% tariffs on European wine in retaliation over subsidies the EU provides Airbus. Two months later, 100% tariffs were proposed in response to the Digital Services Tax, France imposed on billion-dollar companies like Google, Apple, Facebook, and Amazon. If 100% tariffs are implemented, it will affect the following products:

Wine (from Austria, Croatia, France, Germany, Greece, Hungary, Italy, Portugal, Romania, Slovenia, Spain, and the UK); Single-Malt Irish or Scotch Whiskies; Cheeses (think Parmesan and Roquefort); Butter; Oranges; Mandarins and other citrus fruits; Frozen specialty meats; Olives; Olive oil; Sausages; Coffee; Jam; Tools and machinery from Germany, to name a few.

“Well, then drink domestic wine,” I keep hearing. Guess what? It isn’t as straightforward as one might think. A Pinot Noir from Oregon or California doesn’t taste the same as a Pinot Noir from Burgundy. But most importantly, domestic wine producers cannot sell direct to restaurants and retailers. They need distributors who mostly work and profit from European wines. Local wines cannot sustain the loss, so the price of domestic wines would inevitably go up. Tariffs would push importers, distributors, restaurants, retailers, and more to lay off U.S. workers, resulting in the loss of US jobs, a loss of income and payroll-tax revenue for the Federal and many State governments, and let’s not forget the substantial financial impact to the bottom line of many U.S. businesses that may be forced to shut down and disappear after many generations of hard work and tireless service.

See the numbers below provided by the National Association of Wine Retailers for some perspective:

How can one help save American jobs and businesses?

Write your elected representatives by February 17, 2020: US Representative and US Senator. Mention in your letter: “Response to WTO ruling on Boeing and Airbus (docket #USTR-2019-0003-2518).”

See below for more on the issue:

Watch Ray Isle (Executive Wine Editor of Food & Wine) live on CBS News.

MSN; SevenFifty Daily; Inside Trade; Bloomberg.

Thank you so much for your support!

Anna