Thanks for posting! Tariffs don’t just penalize EU growers but also hinder US businesses who are also distributors of wines both domestic and imported. If they go out of business, the domestic producer looses their distributor.
I started a boutique import company 5 years ago with an expressed focus on low-intervention Swiss wine... I grew up in Switzerland and I saw how dynamic the natural wine scene had become in my tiny country - I wanted to help American consumers try a taste of that tiny corner of the wine world.
I took a much smaller margin for those wines because the price point on those wines were already a bit higher than what I felt the market would accept for such an unknown commodity. They found a crowd here in California and I was encouraged that there was indeed potential for growth... until now. Trump's non-sensical fight with Switzerland that led to an inexplicable 39% tariff rate killed my small business in one fell swoop.
I'm but one of 1000s of businesses that are (and will be) shuttering because of his decision. Outrageous, but I guess this act of national suicide is what the American people voted for.
I'm a tax-paying American winemaker that owns a organic "cru" vineyard in Morgon France and I just had to write Trump (another) check for these scientifically flawed tariffs...err...TAXES ON AMERICANS. This 15% tariff gets marked up a further 25% by the (American, family-owned) importer, then another 25% by the (American, family-owned) distributor, then 25% by the (American, family-owned) retailer. Where is the vomit emoji?
John is correct. The current tariff regime is, at best, incomplete without serious reform to Drawback provisions. USWTA, Wine America, and other groups can (and SHOULD) be working with grower groups that have been putting in the effort on this.
It is unpopular to discuss, but nonetheless reality, that supply side market distortions & advantages enjoyed by many foreign producers allow their product to land in the U.S. at prices that undercut domestic industry and drive market share growth in the World’s most important wine market. This is especially true of bulk wine—the other arm of wine imports that is uncomfortable to address.
Nobody should celebrate small American businesses struggling, which is why it has been so frustrating to read the many discussions of wine trade without an acknowledgement of the immense damage the status quo has leveled on American farmers, farmworkers, and communities.
It is likely the subsidies for France and Italy will decline in the upcoming years as these were most likely propped up by German remittances to Brussels, passed down to France and Italy. As the demand for ICE autos decline, this industrial base will suffer to pay these excess taxes passed onto Brussels.
However, the dumping of wine into the US market at the expense of local industry, the jobs it supported is still ongoing. I was in Lodi last Thursday delivering fruit. I only saw two vineyards with trucks waiting to pick up fruit and only ONE truck by the Chevron on Kettleman Ln where they have staged for the last quarter century. It makes me sick to my stomach
There are probably several factors contributing to the price advantage many European wines have in this market, beyond EU subsidies and such. Does anyone know of an accounting of these subsidies and who exactly benefits from them?
Global wine and alcohol companies draw back these tariffs from the treasury. They pay now, we pay later, they get a refund of the tariffs and excise taxes.
This is a major disadvantage for smaller producers and importers that don’t have both imports and exports.
Industry consolidation is only good for the biggest consolidators. It is bad for family businesses and bad for consumers.
Gee, switch to domestic Wine local wine. So tired also of restaurants “thin margins overall mean 80 percent magind needed on wine”. - need a rethink here
I wish the switch were that simple, like switching from Budweiser to Coors, for example. But switching from robust, branded Bordeaux to something kinda like it from California is not that uncomplicated.
And I hear you about restaurant prices, especially by the glass. It's one reason the wine industry is struggling. Much easier and more accessible to have two glasses of craft beer for the cost of one glass of wine.
Speaking of prices, as tariffs hike them on wines from overseas, won't domestic makers simply see that as running room to increase their own prices? (Your head should be nodding yes, because to the extent the market allows it, that's exactly what I think will happen.)
It's all coming at a bad time for the industry, which may be seeing the end of the endless "premiumization" push amid declining drinker demographics. My hope is that these pressures cause domestic wine to figure itself out soon and come back to its roots a bit, come back a little more down to Earth. That would be good for the industry, IMO. We'll see.
There are thousands of small producers in CA that make a Chablis style wine. We are one of them but we don't enjoy the same marketing subsidy and free shipping the French producer has for the US market.
They will indeed; but as Rodney says above, there are many California chardonnays to explore, from different regions and in different styles. Look for Oceano, from the San Luis Obispo Coast AVA -- it's terrific, and about the price of a good Chablis.
Also, try Oregon chardonnay! Well worth the exploration.
Thanks for posting! Tariffs don’t just penalize EU growers but also hinder US businesses who are also distributors of wines both domestic and imported. If they go out of business, the domestic producer looses their distributor.
I started a boutique import company 5 years ago with an expressed focus on low-intervention Swiss wine... I grew up in Switzerland and I saw how dynamic the natural wine scene had become in my tiny country - I wanted to help American consumers try a taste of that tiny corner of the wine world.
I took a much smaller margin for those wines because the price point on those wines were already a bit higher than what I felt the market would accept for such an unknown commodity. They found a crowd here in California and I was encouraged that there was indeed potential for growth... until now. Trump's non-sensical fight with Switzerland that led to an inexplicable 39% tariff rate killed my small business in one fell swoop.
I'm but one of 1000s of businesses that are (and will be) shuttering because of his decision. Outrageous, but I guess this act of national suicide is what the American people voted for.
I'm a tax-paying American winemaker that owns a organic "cru" vineyard in Morgon France and I just had to write Trump (another) check for these scientifically flawed tariffs...err...TAXES ON AMERICANS. This 15% tariff gets marked up a further 25% by the (American, family-owned) importer, then another 25% by the (American, family-owned) distributor, then 25% by the (American, family-owned) retailer. Where is the vomit emoji?
John is correct. The current tariff regime is, at best, incomplete without serious reform to Drawback provisions. USWTA, Wine America, and other groups can (and SHOULD) be working with grower groups that have been putting in the effort on this.
It is unpopular to discuss, but nonetheless reality, that supply side market distortions & advantages enjoyed by many foreign producers allow their product to land in the U.S. at prices that undercut domestic industry and drive market share growth in the World’s most important wine market. This is especially true of bulk wine—the other arm of wine imports that is uncomfortable to address.
Nobody should celebrate small American businesses struggling, which is why it has been so frustrating to read the many discussions of wine trade without an acknowledgement of the immense damage the status quo has leveled on American farmers, farmworkers, and communities.
It is likely the subsidies for France and Italy will decline in the upcoming years as these were most likely propped up by German remittances to Brussels, passed down to France and Italy. As the demand for ICE autos decline, this industrial base will suffer to pay these excess taxes passed onto Brussels.
However, the dumping of wine into the US market at the expense of local industry, the jobs it supported is still ongoing. I was in Lodi last Thursday delivering fruit. I only saw two vineyards with trucks waiting to pick up fruit and only ONE truck by the Chevron on Kettleman Ln where they have staged for the last quarter century. It makes me sick to my stomach
There are probably several factors contributing to the price advantage many European wines have in this market, beyond EU subsidies and such. Does anyone know of an accounting of these subsidies and who exactly benefits from them?
I can give you an accounting of a vineyard subsidy in France:
700 euro per hectare for farming
0.15 cent per 75 cL
Container shipping allowance
US marketing allowance up to 31000 euro per year (almost equal to one full page ad in Wine Spectator)
totally agree John
great point Scott why does wine need to be so expensive in a restaurant?
Nancy there are 1000's of CA chards simply start shopping on line
Global wine and alcohol companies draw back these tariffs from the treasury. They pay now, we pay later, they get a refund of the tariffs and excise taxes.
This is a major disadvantage for smaller producers and importers that don’t have both imports and exports.
Industry consolidation is only good for the biggest consolidators. It is bad for family businesses and bad for consumers.
Gee, switch to domestic Wine local wine. So tired also of restaurants “thin margins overall mean 80 percent magind needed on wine”. - need a rethink here
I wish the switch were that simple, like switching from Budweiser to Coors, for example. But switching from robust, branded Bordeaux to something kinda like it from California is not that uncomplicated.
And I hear you about restaurant prices, especially by the glass. It's one reason the wine industry is struggling. Much easier and more accessible to have two glasses of craft beer for the cost of one glass of wine.
Speaking of prices, as tariffs hike them on wines from overseas, won't domestic makers simply see that as running room to increase their own prices? (Your head should be nodding yes, because to the extent the market allows it, that's exactly what I think will happen.)
It's all coming at a bad time for the industry, which may be seeing the end of the endless "premiumization" push amid declining drinker demographics. My hope is that these pressures cause domestic wine to figure itself out soon and come back to its roots a bit, come back a little more down to Earth. That would be good for the industry, IMO. We'll see.
I could survive on your Cab Franc for a while!
I don’t care for CA Chardonnay, but have found that I Love French Chablis or white burgundy. I’m sure they will be affected by tariffs. ;-(
There are thousands of small producers in CA that make a Chablis style wine. We are one of them but we don't enjoy the same marketing subsidy and free shipping the French producer has for the US market.
Doesn't the US importer pay for the shipping?
They will indeed; but as Rodney says above, there are many California chardonnays to explore, from different regions and in different styles. Look for Oceano, from the San Luis Obispo Coast AVA -- it's terrific, and about the price of a good Chablis.
Also, try Oregon chardonnay! Well worth the exploration.
Good explainer for non-tax nerds