Jan 9, 2020 - Economy

Wine industry begs Trump administration to forgo huge trade war tariffs

An illustration of a person un-screwing an outline of the U.S. with a cork screw.

Illustration: Sarah Grillo/Axios

The wine industry descended on Capitol Hill this week in a last-ditch attempt to avert 100% tariffs on all EU wines — as well as cheeses, cosmetics and other consumer products.

Why it matters: The U.S. has declared its intention to impose these tariffs as retaliation against the way that European nations illegally subsidized Airbus. But if they go into effect, the brunt of the pain will be borne not by European companies, but by Americans.

How it works: European winemakers can sell their product anywhere in the world. American wine importers, distributors and retailers, by contrast, can only source European wine from Europe.

  • Zev Rovine, a natural-wine importer, tells Axios that the 100% tariff would cover 80% of his sales. The overwhelming majority of his wines would simply become unbuyable at those prices.
  • "I work with small producers of natural wine that are very popular in Copenhagen and Tokyo," he says. Those producers would just sell their product elsewhere — but Rovine could easily find himself out of business.
  • The real risk here is less that European wines will increase in price, and more that they will simply disappear from liquor store shelves and restaurant wine lists.

What they're saying: "We are fighting not just to be able to drink European wine; we are fighting for our livelihoods and for our hundreds of thousands of employees," writes another wine importer, Jenny Lefcourt, in the New York Times.

  • Even American winemakers oppose these tariffs. Jason Haas, the general manager of Tablas Creek Vineyard in California, told the NYT's Eric Asimov that he relies on the same distributors who import European wines. "The short-term impact is likely to be pretty serious and pretty negative," he said.

The bottom line: It can take decades to cultivate transatlantic relationships with European winemakers. If the Trump administration severs those ties, no one knows when or whether they might grow back.

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