If the U.S. government follows through with its threat to impose 100% tariffs on all wines from the European Union, both retailers and consumers will be paying huge price increases on wine. Streetcar will forward this petition to the Office of U.S. Trade Representative to demand that our administration choose an alternate method of negotiating with our European allies.
Beginning on October 18, 2019, the U.S. Government imposed a 25-percent tariff on certain French wine as part of retaliatory tariffs against the European Union (“EU”) after the World Trade Organization authorized retaliation for the EU’s failure to comply with WTO rulings on subsidies provided to Airbus. They only issued a 10% tariff on Airbus itself! It is our understanding that now a 100-percent tariff is proposed on French sparkling wine (consisting mostly of champagne) and that this tariff is part of the Section 301 duties imposed on imports from France as a result of the country’s Digital Services Tax (“DST”). Finally, on December 10, 2019, USTR proposed imposing tariffs of up to 100 percent on all wines from the EU.
Because of these import tariffs, the prices will go up dramatically for wine. Margins on wine are small, and the sale of wine is highly regulated, with virtually every state imposing a three-tier distribution system with markups occurring at each tier of distribution. Thus, a 25-percent tariff on wine imports could result in a 50-percent increase and a 100-percent tariff on wine imports could result in a 150-percent increase in prices for consumers.
There is no substitute for wines imported from the EU. Most of the world's most historic and revered wine regions are in EU countries, and the majority of wine produced globally comes from the EU. It would impossible to replace these wines outright, and the increase in demand from other wine regions would logically raise prices on those wines, as well.
If a 100% tariff were to go into effect in January for even a short time, the impact would be immediate, as EU producers would seek other markets for their current vintages, leaving future US allocations in doubt. Importers are likely to struggle to pass along some of the more expensive wine while searching for alternate sources, which doesn't happen quickly. Undoubtedly, businesses up and down the supply chain would fail.
Why should individual consumers, retailers, importers, and the millions of U.S. citizens working in the wine industry suffer because of a dispute involving Boeing and Airbus or France’s digital services tax?
Here's what we sent to U.S. Trade Representative Robert Lighthizer:
Posted as a comment to the Federal Register:
As the owner of Streetcar, a small wine shop in Boston, Massachusetts, and on behalf of my community of customers and colleagues, I’m writing to express our greatest possible opposition to the proposed tariff of up to 100% on all EU-produced wines (docket # USTR-2019-0009-0038 and docket # USTR-2019-0003-2518). Eleven days ago I mailed nearly 1,200 signatures to your office. Please find the updated petition enclosed, now with nearly 8,000 electronic signatures collected via change.org, to amplify the sentiments of this and the previous letter.
Upon the imposition of a 100% tariff, importers of European wine and the broad network of American businesses they serve would bear an undue burden in the ongoing trade war with our European allies. The resulting nationwide wine industry job losses likely would approach or exceed 100,000, and the cost to the American economy would be in the tens of billions of dollars. Using thousands of much smaller businesses as pawns to defend Boeing, Facebook, Amazon, Google, and Apple is discriminatory, myopic, and antidemocratic.
Please help lead the country toward negotiations less harmful to American small business. Thank you for the opportunity for comment.
Mailed to the USTR on January 2, 2020:
As the owner of Streetcar, a small wine shop in Boston, Massachusetts, and on behalf of my community of customers and colleagues, I’m writing to express our greatest possible opposition to the proposed tariff of up to 100% on all EU-produced wines (docket # USTR-2019-0009-0038 and docket # USTR-2019-0003-2518). Please find the enclosed petition, with nearly 1,200 signatures collected in the shop or on the internet via change.org, to echo the sentiments of this letter. I would have written sooner, but the proposal coincided with our industry’s busiest time of the year.
If the tariff is imposed, mine will be among the thousands of American businesses that will pay the consequences. Immediately upon the effective date of imposition, American importers would be forced to pay the tariff, which in some cases will be for wine they committed to buy before the tariff was proposed. The wine will then be offered to wholesalers (in some cases), retailers, restaurants and bars at roughly double the price they may have paid last year, in the hopes that consumers will be willing to stomach a similar roughly double price increase. In all cases, Americans will foot the bill for a punitive tariff aimed at our allies in the European Union.
Potential ripple effects to the proposed tariff extend well into the future. We expect reduced access to the wines we have been purchasing, as the European producers seek alternate markets for the wines they had hitherto allocated to the U.S. market. We expect higher demand, and thus less availability and higher prices for non-EU wines. We expect further consolidation of an already thinning fleet of large U.S. distributors, and the disappearance of many small, European-focused importers. In short, the tariff would severely limit the growth and diversity of the entire wine market for years to come.
Please help lead the administration toward negotiation tactics less harmful to Americans. Why should consumers, retailers, bars, restaurants, importers, and the millions of U.S. citizens working in or alongside the wine industry suffer because of a dispute involving airplane manufacturers or France’s DST?
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