The Insanity of Trump’s Wine Tariffs

https://www.nytimes.com/2020/01/05/opinion/wine-tariff-trump.html

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I have spent 20 years building a wine-import company. On Jan. 14, the Trump administration could destroy it all by imposing a 100 percent tariff on European wine.

Mine is not the only American business that would suffer. The United States imports over $4.25 billion a year in European wine, which is handled by thousands of importers, distributors, wine stores and restaurants. In recent weeks we’ve all been scrambling to avoid disaster. We are sending emails and letters to clients, begging them to call their representatives in Congress. 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.

We have already been hurt by tariffs. In October — a peak season for wine sales — the government imposed a 25 percent tariff on French, Spanish and German wines, along with single-malt Scotch and other European food products.

I and most of the other importers I know spent weeks on the phone negotiating with winemakers to keep working with us. Many of them wanted to walk away from the United States market; after all, these days demand from Asia is huge. We cut margins and raised prices as little as possible, all the while wasting precious time we would have normally devoted to trying to increase our sales.

Many American companies put the brakes on hiring and expansion plans, waiting to see if the tariff would come down after a few months. Instead, it’s about to go much, much higher. Worse, the new tariff covers more products, including sparkling wine and wine over 14 percent alcohol content, categories that had been spared before.

The purported reason for the tariffs is European financial support for the aerospace company Airbus, a major competitor of Boeing. The World Trade Organization declared that this support amounted to an unfair subsidy and in October approved retaliatory American tariffs on European luxury goods including cheese, olive oil, cashmere sweaters, handbags, cosmetics, spirits and wine.

Tariffs do nothing to protect jobs. On the contrary, the U.S. Chamber of Commerce has published a map showing how American businesses and consumers — including those in areas whose elected officials loudly support these tariffs — are already being harmed by a global trade war.

You might think, “Who cares if the price of European wine goes up? People can just buy domestic wines instead.” And they will. But in the process, the vast industry responsible for importing and selling billions of dollars in wine, whisky and other products from Europe will suffer — especially small businesses with narrow profit margins.

Investment will grind to a halt. People will lose jobs. Adding a new producer to our book from the Loire Valley? Not now! Ordering containers of wine? I’ll wait to see if the tariffs go through.

Some of the winemakers in our portfolio are among the most sought after in the world, with limited capacity to expand. If they cannot sell to the United States, they will gladly go to China or Russia — and if the tariffs ever go back down, we could find ourselves at the back of the line.

The wine industry is linked to other industries, like hospitality. Importing companies sell to wholesalers (which together employ 100,000 people), which sell to retail shops and restaurants (three million employees). Trucking, warehouse and shipping companies will all be affected. Office assistants, truck drivers, forklift operators, logistics coordinators, bookkeepers and restaurant chefs and servers could all see their jobs in peril.

Full-service restaurants are a $179 billion industry. High-end restaurants that serve wine have done particularly well in the last five years, with wine sales making up for their losses on food.

Likewise, wine and liquor stores are one of the few bright spots in the brick-and-mortar retail economy. They had an estimated total revenue of $61 billion in 2019, with a growing amount of that coming from high-end, imported beverages.

No one I know would argue that the Trump administration is wrong to protect American industries by pushing back when it sees unfair practices by other countries. But tariffs make no sense — if we insist on charging European winemakers more to sell their products in the United States, they will easily find another buyer. The only ones hurt will be American businesses and consumers.

My company plans to celebrate its 20th anniversary on April 19. We had been hoping to have a big party. If the tariffs go through, my employees and I could instead find ourselves on the unemployment line, mourning the loss of our livelihood and the death of an industry that has brought much joy to the world.

Jenny Lefcourt is president and co-founder of Jenny & Francois Selections, a natural wine importer.

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