Why Wine Tariffs Matter To You And Everyone

It’s not just all about you and your DRC. It’s about jobs.

The other day I posted links to a number of reliable news and industry sources that explain the [il]logic for the Trump administration’s proposed 100% tariffs on European wines and the impact that would have on several aspects of the industry (and, no, Mr. Trump, imposing tariffs will not help your winery in Virginia. Just sayin’).

Yesterday a friend told me a job in the wine industry for which she was being considered just disappeared because the company was nervous about the proposed tariffs, and is putting off hiring.

Today I’m going to tell all you wine lovers and supporters of the wine industry how to speak up. Comments are due Jan. 13, and below I’ll include links to the U.S. Trade Representative’s (USTR) comment page, as well as links where you can address your congress people, and petitions you can sign. And, best of all, I’ll include a template you can copy and paste to any and all of the above! All you need to do is care about this issue enough to execute a few keystrokes.

First, before you take my word for how important this is, here are comments from industry professionals who have either testified in Washington, D.C., yesterday before the U.S. Trade Representative, or have written to government officials. 

Christy Bleyle Frank of Copake Wine Works in upstate New York, testified in Washington, and wrote, “The wine industry’s supply chain, with its legally mandated three-tier system, doesn’t have easy parallels to other industries. Its structure means that a disproportionate burden of the tariffs will fall on small family businesses and its strict regulations and the very nature of wine give us very little room to pivot. So we aren’t just making a case for why jobs shouldn’t be lost – we’re trying to educate everyone as to why it’s inevitable that they will be.”

Antonio M. Galloni, CEO and founder of Vinous Media, posted his letter to the Trump administration. Here are excerpts:

“The US wine industry employs 1.74 million people and generates $68.1B in sales through both retail and hospitality channels. Approximately a third of these sales are from imports, 75% for wines produced in EU countries. Those wines are sold by every mom-and-pop corner liquor store struggling to pay the rent, every salesperson trying to meet her sales target, every young person waiting tables to put themselves through school, every truck driver working around the clock to deliver packages to consumers and businesses, and many thousands of other middle-class Americans around the country who work in the wine industry. The proposed tariffs, which range from 25-100%, will have a devastating effect on these people and their families.

In addition, these tariffs pose a significant and very real threat to the long-term viability of wineries in the United States. In 2018, the EU was the largest export market for California wines[5]. The EU could very well choose to retaliate by levying tariffs on US wines, which would be devastating to American wineries precisely at a time they need growth from those markets to survive and are broadly beginning to establish themselves as qualitative peers to the very best European wines.”

From the testimony of Michelle DeFeo, president of Laurent-Perrier US, a subsidiary of French company Champagne Laurent-Perrier.

“Tariffs on this [Champagne]  category would cause significant economic harm to thousands of American businesses.

French sparkling wines generated about $2 billion in retail sales in the US last year. Only about one third of that amount is paid to French producers: The remaining two-thirds, or $1.3 billion, funds jobs at thousands of American companies along the supply chain. Even at the maximum proposed rate of 100%, the value of this tariff to the Treasury is less than the annual revenue earned by American companies by selling wines in this category.

My company sells only French sparkling wines. Any reduction in demand caused by tariff-induced price increases would have an immediate negative impact on us and on the American companies in 46 states who sell our wines, including:

• 51 distributors, 49 of which are small businesses
• 5 sole proprietor wine brokers
• 7918 stores and restaurants, 76% of which are independent establishments

I have already laid off one position due to the extreme uncertainty around the DST and Airbus disputes, and am not likely to add the position I was hoping to in 2020. This represents 13% of my workforce. These are good jobs with full benefits and average salaries 4 times the US nominal median per capita income.”

WHAT YOU CAN DO

Now, as promised, here’s a down and dirty template you can copy and paste on the sites I’ll list below (and thanks to Sarah Bray, international wine marketing consultant and master of wine candidate who provided an initial draft).

Dear [Fill in name]:

I am writing as a customer and consumer of imported and domestic wines because I am concerned with the multiple rounds of tariffs that are being imposed and considered on wine from the European Union (“EU”). I strongly urge you not to punish wine consumers, or hardworking wine retailers, importer/distributors, sommeliers, and other wine sellers for problems they didn’t cause, and instead consider those companies responsible for igniting these issues.

Because of these import tariffs, prices for wine will increase dramatically. Margins on wine are already extremely small, and the sale of wine is highly regulated with nearly every state imposing a three-tier distribution system with markups occurring at each tier of distribution. Thus, a 25-percent tariff on wine imports will likely result in a 50-percent increase and a 100-percent tariff on wine imports will likely result in a 150-percent increase in prices for a consumer like me.

There is no substitute for imports of wine from the EU. Wines from the EU are different from domestic wines and wines from other countries as a matter of consumer taste. In addition, because it takes many years to plant new grape vineyards and allow the vineyards to produce mature fruit that can be harvested to make wine, it will take at least a decade before the U.S. domestic wine industry could ever be in a position to begin replacing wine imports from the EU.

Wine consumers and American wine-related small businesses such a retailers, importers and restaurants—many of which are family or individually owned—should not suffer because of a dispute involving Boeing and Airbus or France’s digital services tax. Small European producers looking to break into the American market should not be punished. Retaliatory tariffs on these matters should target Airbus and their suppliers who benefitted from the subsidies, and French digital services companies.

Professionals from every sector of the wine industry object to the proposed tariffs, which not only threaten the import and enjoyment of wine, but also impact all levels of business. Small businesses will not expand, or worse, may close. People will be out of jobs. Already, jobs that were in the offering are being withdrawn from the market in anticipation of a worse-case scenario.

Thank you for your consideration and respectfully submitted.

SPEAK UP! LINKS FOR VOICING YOUR OPINION

To be assured of consideration, submit comments by Jan.13.

USTR strongly prefers electronic submissions made through the Federal Rulemaking Portal: LINK HERE

Review of Action: Enforcement of U.S. WTO Rights in Large Civil Aircraft Dispute (one of the reasons Trump proposes the tariffs on wine, in retaliation for subsidies given to Airbus, one of Boeing’s competitors) LINK HERE

Email (copy and paste text!) the U.S. Trade Representative:

The Honorable Robert Lighthizer, U.S. Trade Representative LINK HERE

Email your U.S. congressperson, via National Association of Wine Retailers template and links HERE

Sign “Save American Wine Jobs” petition at change.org LINK HERE