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The following letter was sent by Rare Wine Co. President Mannie Berk to United States Trade Representative, Robert Lighthizer, on December 30, 2019:
Dear Ambassador Lighthizer:
Founded in 1989, The Rare Wine Co. is proud to represent a number of Europe's finest artisanal wineries. The wine producers we represent are all quite small and are revered by those who appreciate wines that are true expressions of their region’s soils, climate and winemaking traditions.
We are among hundreds of American wine importers and wholesalers who were seriously hurt by the first round of wine tariffs imposed in October. Yet, our very existence is threatened by the latest round of proposed tariffs on wine.
The value of imported European wine to the US economy is substantial: over $28 billion. It breaks down this way: sales by U.S. importers $5.5 billion; sales by U.S. wholesalers $7.8 billion; and sales by U.S. retailers and restaurants more than $15 billion. And since only $4.25 billion is returned to Europe in payment for wine, 85% stays in the U.S. economy, supporting many thousands of jobs and paying billions in taxes at all levels of government.
So, what would actually happen if our worst fears are realized and a 100% tariff is applied to all European wines? In theory, the price to U.S. consumers of all European wines would double. But the reality would be quite different. Within months, European wines would largely vanish from the U.S. market, given their price disadvantage to wines from the Southern and Western Hemisphere. Importers would simply stop buying European wine.
The suggestion that importers would switch to wines made elsewhere is not grounded in reality. The cost (in both time and money) of building a new, non-European portfolio would be far greater than most importers could possibly afford. Many would find themselves out of business within a year. Not only would tens of thousands of jobs be sacrificed; the expertise of a generation of importers steeped in European wine would be lost to us.
Given all the excluded categories, I would not be surprised if the first round of 25% wine tariffs announced in October only nibbled away at the $7.5 billion authorized for retaliatory tariffs in the Airbus matter. A 100% wine tariff of all European wines might accomplish even less, as imports—and the accompanying tariff revenues—would slow to a trickle. It might take only a year for countless small-to-medium-size US companies to be forced out of business, laying off thousands of people.
Increased wine tariffs would also be a very mixed blessing for American wine producers. While U.S. wineries would gain a strong competitive edge within the United States, the tariffs would be very damaging in their efforts to build foreign markets, as the EU retaliates. There are ample lessons to be learned from the U.S. wineries whose hard-earned trade with China evaporated over the past year. There’s good reason for U.S. wine producers to oppose these tariffs on European wine, as they have.
For a number of reasons having to do with climate, soil and tradition, many of Europe’s best wines could not be quickly or easily replicated elsewhere. Yet, the world stands to lose these irreplaceable products if these wine tariffs are allowed to go into effect. It is naïve to believe (as some have suggested) that producers will simply divert the U.S. allocations to Asia and other emerging markets. The U.S. is far too large a market to be replaced overnight.
While some producers will succeed in finding the new customers they need, many other will not. These include some of the continent’s most beloved small estates. Even a year’s worth of additional wine tariffs could result in families being forced to sell the properties they’ve owned for generations.
I join the countless other American wine merchants who believe that these tariffs are fundamentally unfair. It’s not only that we have been made pawns in a dispute that has nothing to do with wine. Even the way the first round of tariffs was implemented in October failed to consider the needs of American businesses.
Because the initial tariffs went into effect just 11 days after we learned of them on October 7, many West Coast importers were caught with multiple containers on the ocean, with no way of turning them around. We were among those importers and saw much of our 2019 profits wiped out.
It’s also important to note that we, like every other importer we know, had to absorb virtually all of the tax. Given that we were already in the middle of the peak Fall season, with prices already set, passing the cost onto customers was not an option.
If these new, higher wine tariffs are allowed to go into effect, great damage is likely to be done not only to U.S. companies and their employees, but for the future of American-made wines in a global marketplace.
It is unfair to sacrifice imported wines—and the lives of the people who bring them to our tables—as a bargaining chip in disputes having nothing to do with them. If tariffs are needed, they should be put on the products and services in dispute.
Founder & President
The Rare Wine Co.
If you'd like to to protest the proposed wine tariffs, we urge you to write the United States Trade Representative, Robert Lighthizer, using this link. In the top right of the page, simply click the blue "Comment Now" button, and put your note in the window. And make sure to check the box to add your Contact Information at the bottom, since non-anonymous comments carry more weight.
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