President Trump is really annoyed with France and is lashing out at them in a way that will hurt all wine-drinking Americans. So what did France do to draw such ire? France has been pressing large American corporations (Google, Facebook, etc.) to pay the country’s newly passed digital service tax. In retaliation, Trump is trying to hit them with a 100% tariff on wine imports and other goods like cheese, handbags, makeup, and soap.
This is on top of a 25% tariff Trump already enacted on European goods this past October after the E.U. was found guilty of unfair subsidies to Airbus, giving the European company an unfair advantage over the U.S.’s Boeing. The October tariff hit all wines from France, Spain, Germany and the U.K., except for sparkling wines, wines over 14% alcohol and large-format bottles.
If you didn’t notice that your European wines had increased in price by 25%, it’s because many of them didn’t. Most European winemakers and importers absorbed that cost so they wouldn’t see a reduction in their wine sales. Instead, their bottom lines fell by 25% so your wallets wouldn’t take the hit. There is no more room for them to absorb further costs, so this new 100% price increase will be passed on to you.
You might think the increase in prices on European wines means you’ll just buy U.S. wines instead. You may see a cost savings in the short term, but studies have shown there is a good possibility U.S. winemakers will raise their prices too because of lack of foreign competition.
These tariffs will also hurt American businesses that rely on the sale of European wines and other goods (e.g., retailers, distributors, restaurants, transportation companies, etc.). In addition, one-third of all U.S. wine exports from California go to the European Union (EU), so any retaliation on the EU’s part will cause U.S. wine exports to suffer.
Not only that, but American wine consumers will be penalized by lack of choice. Currently, 35% of wine purchased in the U.S. is European wine. If you love Burgundy, Bordeaux or Champagne, you may have a hard time finding your favorite bottles because wine retailers will purchase less foreign wine out of fear they won’t be able to sell it at the higher prices.
Bottom line – Trump’s proposed 100% tariff on European goods will hurt you more than it will hurt France. The biggest consumer of French wine is China, not the U.S., so France may be perfectly content to focus on their China exports to the detriment of the U.S. As of now, there is no official implementation date for these tariffs and there seems to be a desire on both sides to negotiate a deal. However, the European Union has vowed to retaliate if these tariffs are put in place. Hopefully we will see a positive resolution to this stand-off in the coming weeks.