If you follow anyone in the wine business on social media, you’ve seen a linked article about wine tariffs or a change.org petition to fight them. If you haven’t, you might want to sit down. I have some important and worrying things to tell you.

TL;DR - The Wine Tariffs are Very Bad. Sign the Petition Here!

US Trade Representative is strongly considering a 100% tariff on all European wines entering the United States. Actually it is on all kinds of European staples like cheese, olive oil, and much more, but I’m going to focus on what I know best. Wine.

You can find great articles explaining the specifics of the tariff and their role in the complicated world of global trade negotiations here, here, and here.

I’m writing this article for a different reason. I want to talk honestly about what these tariffs mean for you as a wine lover and how bleak 2020 could be if they are implemented.

European Wines Would Almost Certainly Double in Price, if You Can Find Them At ALL.

100% tariffs basically means a doubling of price on the shelf.  This article explains much of the pricing structure of the wine business, if you are interested.  The reality of the situation is that much of the wine that you enjoy today would jump one or two price tiers.

Imagine your Italian Prosecco that was $10 is now $20.  Your French Cotes-du-Rhone that was $15 is now $30.  That $18 Provence Rose is almost $40.  And that $100 Bordeaux is now $200.  

Most of these wines would quickly vanish from retail shelves and restaurant wine lists.  As European wine is the world’s elite, they would quickly find homes elsewhere in the growing economies of Asia, Russia, and the Middle East.

American Wine will be More Expensive and of Worse Quality

The European Wines listed for tariffs make up approximately 1/2 of the total wine production of the world.  The entire United States is only a sliver of that.  There is no way that American wines can make up the difference.

Because of the three-tier-system of wine distribution, these tariffs would likely also dramatically disrupt the path-to-market for most quality-focused American wineries.  This article by Tablas Creek in California, shows how this would happen.  

We can also learn from the impact that Canadian tariffs of American wines had in throttling the growth of the Canadian wine industry.  Without competitive pressure, other wineries don’t advance as quickly and the wine consumer loses.

Many of the Best People in the Wine Business Could Lose Their Jobs

When people imagine the wine business, their mind is full of bucolic landscapes and hard-working farmers, but the truth is that large corporations dominate the wine landscape with low-price low-quality wines.  Many of wine’s most passionate advocates are importers, distributors, brokers, retailers, and restaurants who built their business on the differentiation of small European wines.

“I know you could sell that generic $20 Chardonnay that every chain store and gas station sells, but wouldn’t you rather sell this beautiful white from Italy for $15 made organically by three sisters in their mid-20s.”

By doubling the prices of these wines, this business differentiator for these passionate wine lovers disappears.  Many of the smallest and coolest wine people in the business lose their jobs when their employers collapse.

• Jenny Lefcourt of Jenny and Francois “Wine Tariffs Threaten Our Very Existence”

• Vintus Wines “Its’ 2020, Not 1920!”

The Golden Age of American Restaurants Could End

The last decade has seen a major increase in the number and quality of American restaurants - especially outside of major coastal cities.  While many things contributed to that - the Food Network, Anthony Bourdain, rising cost of living in major cities - the symbiosis between small independent restaurants and small wine distributors cannot be overstated.

Small boutique wines give these restaurants a differentiator over the chain restaurants.  Quality wine lists and rise of fine casual dining gave people a strong reason to support locally owned restaurants.  Farm to table and locavore dining fit a European aesthetic that called out for boutique European wines.

Having small European wines at reasonable prices also allowed restaurants to benefit in two major ways.  

1. These independent restaurants were able to partner with small independent wine distributors who were able to offer a superior level of service when compared to the large corporate distributors.  

2. Selling unknown small European wines, that weren’t available at large retailers, made it possible for these restaurants to take slightly higher profit margins.  In a low-margin industry like restaurants, these margins were often the difference between survival and closed doors.

It Could Start a Major Economic Downturn

Historians and economists are in near unanimous agreement that the Smoot-Hawley Act of 1930, which raised tariffs on almost 1000 products by nearly 50%, significantly worsened the Great Depression.

I can imagine a nightmare scenario where the EU reacts to these wine (and many other things) tariffs with a punitive slap on tech companies.  A serious tax on Amazon, Google, Facebook etc would result in a huge hit to the Stock Market.  These stocks are such an important part of so many pensions and retirements - especially as more and more Boomers enter into retirement.

It is easy to imagine the result of that being a economic death spiral that would cause pain far beyond the world of wine an hospitality.

In Conclusion,

As I write this, it is January 6, 2020 and we have about a week to act.

Please let your voice be heard.

• The Petition

• Contact the Trade Representative for the USA

• Contact Your Senator and Representative

Thank You.

Austin Beeman

Photo by Piotr Makowski on Unsplash

FTC Disclosure: At the time of this writing, I am the Vice President of Marketing for Cutting Edge Selections. The opinions and analysis of this article are my own. Not the official position of Cutting Edge Selections.