American small business owners in the wine industry will be hurt by the anticipated wine tariffs which are taxes in disguise.
San Diego businessman and entrepreneur, Greg Martellotto, spoke out against proposed tariffs of up to 100% on European wine currently under review by the Trump administration. The proposal will have dire consequences for both the European and U.S. wine industries.
The cause of these actions is a dispute between the U.S. and the E.U. over governmental subsidies for the airline industry and Airbus.
Greg asks, “Why am I paying more (to import wine) because Airbus is getting subsidies? Why should U.S. consumers pay more for European wine and other products?”
He continued, “How does this benefit American business? If the goal was to punish Airbus and E.U. subsidies for airplanes, you punished me, an American business owner. You took money out of my pocket. How did that help?”
A Brief Timeline for Recent Tariff Actions
Oct. 2, 2019: The World Trade Organization (WTO) rules in favor of the U.S. in the dispute with the E.U. over subsidies for Airbus.
Oct. 3, 2019: The Trump administration announced 25% tariffs on a wide range of European products, including wine.
Oct. 18, 2019: Implementation of a 25% tariff on wines from France, Spain, Germany, and the U.K. It excluded sparkling wines, wines over 14 percent alcohol, and large-format bottles. Only a 10% tariff was imposed on Airbus itself.
Dec. 1, 2019: The WTO Appellate Body rejected an E.U. appeal. U.S. initiated a review of increasing the tariff rates and adding additional E.U. products.
Dec. 2, 2019: The U.S. threatened to impose tariffs of up to 100% on French goods, including Champagne, in retaliation for an E.U. digital services tax. This action was separate from the Airbus dispute.
Dec. 12, 2019: The U.S. Trade Representative (USTR) announced consideration of up to 100% tariffs on European goods, including ALL E.U. wines and a long list of E.U. foods.
Jan. 13. 2019: The USTR will accept public comments on the proposed tariffs until this date.
When asked how he was handling this as a business owner, Greg responded, “I’m on hold, it’s a mess. There is already a 25% tariff on wine. The threat is for the next 90-120 days. It’s going to include all wines from Europe at 100%.”
“The real fear here for me as a direct importer is that I order wine, and it’s in transit when the tariff’s change. 25% is already a challenge because we don’t work on that high a margin. If it goes to 100%, we’ll be in a situation where we’ll lose money by paying the government. How does that punish the governments of France or Germany who are subsidizing Airbus?”
Real Business Consequences
Some European wines became 25 percent more expensive when they arrived in the U.S. starting on Oct. 18.
The industry reduced the impact on consumers by absorbing most of the cost increase. They did not want to lose the market in advance of the vital holiday season.
Some producers and exporters stopped shipments to the U.S. temporarily, waiting for further action.
If the 100% tariff is implemented, producers and exporters throughout Europe will increase prices.
European wine becomes much harder to sell at double the price for consumers, who will face restricted availability.
A 100% tariff could cost the U.S. alcoholic beverage industry upwards of $7 billion, including job losses.
Much higher prices will profoundly and negatively impact wineries, importers, distributors, restaurants, and retailers.
European wines will lose critical market share, and because the U.S. does not make as much wine as the E.U., the U.S. wine industry cannot fully replace European imports.
Small and mid-size companies with tight cash flow might not be able to manage tariffs that are paid upon the wine clearing customs.
Greg adds, “Tariffs harm consumers. We’ll sell less imported wine, and I’ll focus more on my winery, producing more California wine. But not everyone in the industry has the flexibility that I have.”
Tariffs = Taxes
Tariffs are additional taxes on American consumers in the form of higher prices. Many favorite European wines will no longer be affordable, even as domestic wine prices have continued to rise due to the industry’s focus on premiumization.
Consumer’s habits will change, and the impact will be long-lasting, substituting lower-priced domestic wines and wines from other countries beyond Europe. Depending on how long tariffs last, access to European wines could be permanently impacted.
Contact your local political representatives and the trade office in Washington, D.C. Tell them this proposal is anti-consumer and anti-small business.
ABOUT Big Hammer Wines
Since its launch in 2009, Big Hammer Wines has been committed to sourcing wines of exceptional quality and value at every price point, from the U.S. and around the world.
With an impressive direct-to-consumer (DTC) sales model, Big Hammer uses technology to integrate and improve the wine distribution channel, resulting in more favorable pricing.
Inc. Magazine has recognized Big Hammer Wines as one of the fastest-growing companies in the U.S.
To learn more about Big Hammer Wines, visit the website: https://www.bighammerwines.com/ or email [email protected].
Contact:
Greg Martellotto, Owner
Big Hammer Wines
