Last October, several European countries that export wine to America were jarred by punitive tariffs of 25%. American importers braced as select wines and foods from France, Spain, Germany and the United Kingdom took a hit.
It wasn’t the first shot across the bow by the current administration in Washington. And it may not be the last. Two additional tariffs may be coming.
The most immediate threat is a 100% tariff on French sparkling wines, which were excluded from the 25% October tariff, proposed because of a disagreement with France’s digital service tax.
Last week, two dozen members of the wine industry, from all tiers and all sizes of companies, met and testified at a hearing of the Office of the U.S. Trade Representative in Washington on how a tariff of 100% on French sparkling wines in particular would impact their industry.
One of those was Dallas’ Barkley Stuart, executive director of Southern Glazer’s Wine and Spirits, who was also immediate past chairman of the Wine and Spirits Wholesalers of America.
“It is very powerful to have had the industry well-represented and aligned at the hearings,” Stuart says. “There was representation from large and small, supplier, wholesaler and retailer partners, and all were aligned in our position that the tariffs will cause more damage to the U.S. economy than to the French economy, and therefore are counterproductive.”
The 100% tariff on French sparkling wine, one of two 100% tariffs looming, could go into effect before the end of January. It has rankled local importers, distributors, restaurateurs and wine-and-spirit shop owners.
The 25% tariff has already affected James Gunter, who owns Wines with Conviction, a Dallas wine importing and distribution company specializing in French wine.
“We had two shipping containers of wine [about 25,000 bottles] that arrived last fall and had to pay $18,000 [about 75 cents per bottle] in tariff charges,” he says. That equates on retail shelves to a $2 to $3 per bottle price increase, if he chooses not to absorb the tariff. And make no mistake: It’s Americans who pay for these tariffs.
“We heard about the [possible] 100% tariffs a month ago and locked our buying down,” Gunter says. “We have nothing on order, and cannot make a plan, until we have an answer if it will stay at 25% or go to 100%.”
Lining up on the runway is another tariff that was also proposed in December. This one threatens to levy a 100% tariff on most European wines, as well as Scotch and Irish whiskies, European cheeses, olive oils and other food products. It is slated to take effect in early 2020, replacing the already imposed 25% tariff on wines. This new tariff originates over a dispute regarding aircraft manufacturing subsidies.
Meanwhile, the existing 25% tariff also affects foods, such as aged cheeses from Italy like Parmigiano Reggiano.
For Paul DiCarlo and family, who run the popular Jimmy’s Food Store in Old East Dallas, Italian imports including pasta, olive oil, wine and cheese, are the mainstay.
“I’m not worried right now,” DiCarlo says. “We’re still selling Parmigiano for $9.99 a pound.” That is, DiCarlo and his suppliers are absorbing the 25% tariff. But that might not be possible with a 100% tariff.
“Where a wine comes from is what wine is all about. It’s what shapes its very nature,” wrote Jennifer Uygur in an email. She and husband David own Lucia and Macellaio, two enormously popular Italian restaurants in Oak Cliff’s Bishop Arts District.
“It’s not as simple as just replacing all the Italian wines with American or Greek or South African ones,” she wrote. “If these tariffs go through, how do I keep the Italian soul of my wine list?”
What has confounded these local business owners is the barrage of tariffs and the day-to-day business disruption they cause.
“Right now, I’m ordering as I always do ― focusing on wines from Italy, Spain and France,” Uygur says. “I can’t imagine my lists without European wines.”
In the meantime, all are devising contingency plans.
“There is no doubt, the current state of affairs is bad for the entire industry,” Stuart says, “and it could get worse if this isn’t resolved in a timely manner.”
“I don’t think we’ll get to that [100% tariff] point,” DiCarlo says, “but if we do, we’ll cross that bridge when we come to it.”
What can you do?
* Develop a good relationship with your local wine shop or retail store owner. They get deals all the time and will pass them on to their better customers, often through email offers.
* Now is a good time to look for wines that will be great deals if the 100% EU tariff hits. A $9.99 Tuscan red or a $5.99 French rosé might seem like a fixture in your local store, but if the 100% tariff goes into effect, all bets are off. Buy them when you see them. Search out local, family-run shops, the mom-and-pop stores that buy lesser-known or unusual varieties, which offer value and are rough-cut gems.
* Look for wines that won’t be affected by the tariffs, wines from places like South Africa, Chile, Argentina, New Zealand and Australia. I found a delicious 2018 Windsong Chardonnay from one of Australia’s premier wine-growing regions, the Margaret River, at Aldi for $7.99. It’s a wine I’m going back for.
Alfonso Cevola is a Dallas-area wine writer.