How tariffs have affected wine sales

An analysis in Barron's and carried in Penta described how US tariffs on EU goods have affected wine sales in the US. Last October, the U.S. government began imposing 25% tariffs on still wine from several European countries in retaliation for European subsidy of Airbus. Those tariffs were supposed to expire now, but the US government has decided to let them continue. 

Tariffs on alcoholic beverages are causing harm to U.S. small businesses and the hospitality industry. The 25% tariffs mean that for every US$1 in harm dealt to EU businesses an estimated US$4.52 is dealt in damage to U.S. businesses. This is hard to absorb on top of the Covid-19 pandemic fallout. 

The US has a prohibition-era law that requires only US-owned businesses to deliver wine to consumers in a three-tier system. The U.S. distribution system requires wine producers (which can include importers) to sell to wholesalers, which then sell to retailers, which sell to consumers, meaning margins for most of these businesses are relatively modest. 

Allowing the tariffs to continue has sent a message to all these small businesses. I hope they take that message to the polls in November. 

Trump's Wine Tariffs

What does wine have to do with airplanes, aside from being served in the air? Just 7 days from today, it's likely that Trump will increase the tariffs on European wines by 100%. That's on top of the 25% already levied earlier this year, all to punish the Europeans for subsidising Airbus, Boeing's major competitor. This at a time when Boeing can't deliver on its 737 Max and they are being forced to compensate airlines for their losses.

Protecting American businesses against unfair practices is certainly admirable, but there has got to be a better way, especially when it comes to a company in trouble of their own making. The American worker is going to be the one hurt by it. The American wine lobby is probably standing in line to support Trump's re-election campaign.

Oh well, more for us, I guess.