You might wonder why I’m taking the time to write against the administration’s proposed 100% tariffs on wine produced in the EU, since I am a champion of wines from non-EU countries like Georgia, Turkey, and Lebanon, and a cheerleader for the local, PA market. Won’t these tariffs help those other markets? Not necessarily, but that is irrelevant. I am opposed in principle to these draconian sanctions whose detrimental impact will be felt particularly hard by those within the EU, but also across the industry, as a whole.
I’m not opposed to tariffs, generally speaking, as their placement is a legitimate tool that sovereign nations can use to protect the interests of their own goods, services, producers, and manufacturers. However, there are always questions regarding the fairness and efficacy of that “protection” when put in practice. In this particular case, the problems are pretty apparent.
One glaring issue is that the recipients of these punitive measures are far removed from the aircraft-manufacturing industry, which spurred the tariffs in the first place; an international court verified that unfair actions were taken to benefit Airbus, by that companies component governments (France, Germany, Spain, and England). Those initial tariffs, though taken against the consumer and wine industry rather than the aircraft industry or industrial manufacturing sphere, were taken in stride by wine producers and importers as a recognized consequence of international trade-relations.
Now, however, the proposed tariffs are more widespread, affecting the food and wine industry of the entire EU, far beyond the Airbus-backed governments; and those punished remain tangential to the actions being denounced. These tariffs are also far more severe. Initial tariffs were 25% on only some wine-products from those targeted countries. Now, however, the tariffs would quadruple to 100% and be applied to all wine products from EU-member countries. In addition, French champagne is targeted with a 100% tariff as retaliation for unilateral taxation of Digital Services by the EU on US corporations with significant global reach.
This leads to another problem. Tariffs and other such sanctions are often characterized as punishment against a de-personalized group or criminalized cartel; this “other” is generally not a “known” for whom sympathy is offered. The focus on foreign wine and foods seems an overt appeal to Populism over the conspicuous consumption of a nameless and faceless elite, that is designed to elicit little support from the general public. The overtly populist appeal becomes more transparent in the juxtaposition of tariffs on French Champagne in retaliation for the Digital Services Tax against large, US Corporations: “elite” wine vs “soulless” corporation. But, maintaining this position becomes untenable in the face of the full effects of the tariffs, whose consequences will be felt at all levels of the EU AND US economies –growers, producers, wholesalers, retailers, and consumers.
While certainly “choice” will be diminished for American consumers as EU wines become too expensive to import and stock, American businesses will also be hurt by these punitive sanctions as the import and distribution system of wine products will be disrupted. In Pennsylvania, in particular, wine does not flow directly between producer and consumer. Distributors are responsible for the movement of wine from all countries, including the US. The negative impact on these networks will result in loss of choice for the US consumer, but also loss of jobs for US citizens. As retaliatory measures, these fall short of their foreign-government targets, and instead cast a wide net affecting US businesses and consumers.
The US trade administration is accepting public comments through January 6th for champagne tariffs, specifically, and January 13th for the wider tariffs. An excellent source (and also a great read, in general) for where and to whom to write can be found here.