What can wine buyers expect from the 25% tariffs imposed in October by the Trump administration on a wide variety of European wines?
In a word: trouble.
Wine buyers gradually will encounter higher prices and reduced selections. The tariffs apply only to wines shipped after Oct. 18, so you may want to stock up on wines already in stock. Scrupulous retailers will not jack up the prices on wines now on the shelves.
If there is any good news in this fiscal imbroglio it is that not all European wines are affected. French, Spanish, German, and British non-sparkling wine under 14% alcohol will see prices rise. Wine from Italy and Portugal is not included, nor is wine from South America, South Africa, Australia and New Zealand.
At the heart of this messy situation is the Trump administration’s justification for imposing the tariffs. The president has been fussing for years about European government subsidies to the aircraft manufacturer Airbus, claiming that such subsidies damage America’s largest airplane maker, Boeing.
The link between making planes and making Burgundies escapes me.
The World Trade Organization ruled in favor of the United States’ Airbus gripes. So on go the tariffs and up go the prices. Expect to see the results within 30 to 45 days.
Go buy your Christmas wines now. Remember: Champagne is excluded from the tariffs.
Mid-range European wines — those priced at $20 to $50 — will be hit the hardest, market watchers predict. Jeff Siegel, a Texas-based blogger known as the Wine Curmudgeon, mentioned that a prestigious Dallas retailer remarked that if $15 French and Spanish wine suddenly costs $20, who will buy it? They’ll just switch to another $15 wine. And probably not one from Europe.
Some lower-priced French and Spanish wines may disappear from American stores. For example La Vieille Ferme, a low-priced French brand, will likely go away, according to a prediction by a French wine producer and an English wine business consultant.
Look for other casualties among labels considered value brands, especially from southern France’s Pays D’Oc, where a wide variety of good-quality, sensibly priced wines originate.
The European Union continues to study possible retaliatory tariffs. A decision on whether to slap punitive fees on American wine or other products is not expected until early in 2020.
Does anyone benefit from this trade war? Australia, New Zealand, Chile, Argentina, South Africa, Italy and Portugal can expect to see some American buyers switching to their wines. And when those buyers discover the multitude of high-quality, reasonably priced wines from those countries, what are the chances they will return to their old favorites even after the tariffs are blown up and blown away?
Speaking of that, how long will the tariffs linger?
Siegel writes about conversations with his contacts. “Almost all I talked to were pessimistic. One official at an important New York importer said he was an optimist, which meant 12 to 18 months. ‘And that’s because I’m an optimist,’ he said. ‘Others are telling me the tariffs will be here forever, because who lowers taxes once they’re imposed’?”
Matthew Kaner, who owns a pair of wine bars in Los Angeles, is very worried.
The tariffs “will have big cost implications to some of our favorite imported wines from France, Spain, Germany, and the UK,” Kaner stated. “A 25% increase in the cost of the wines starts with decisions for importers to make: whether or not to continue importing wines that will immediately cost them 25% more, and when you pass along a higher price to distributors and then to the wine store, wine bar, or restaurant, that could be a 40% increase in pricing to the end consumer!”
Translation: Wherever you buy wine — at a retail store, wine bar or restaurant — if it’s from one of the tariff-laced European countries, you, the wine buyer, are going to get hammered.
And that’s before you open the bottle.
Randall Murray is a Gainesville-area resident. Have a question about wine? He can be contacted at email@example.com. His column publishes monthly.