Tuesday, July 28, 2020

Local retail stores and restaurants advocate against proposed 100 percent tariff on imported European wines

US Trade Representative accepting public comments online through July 26

Posted by Parker Milner on Tue, Jul 28, 2020 at 4:53 PM

A large civil aircraft dispute between the United States government and the European Union could impact the local Charleston wine industry. After keeping wine tariffs at 25 percent in February, the United States Trade Representative (USTR) could raise the tax on most wines from France, Germany, Italy, the United Kingdom and Spain to 100 percent during their next review, set to take place in August.
The increased tariff on European wine and other goods is a retaliation against the E.U. for illegal subsidies it provided to airplane manufacturers like Airbus. The result, however, could be devastating for a United States hospitality industry that has already been rocked by the coronavirus pandemic.

"For every European winery that this attempts to negatively influence, it's a negative for free American companies that bear the burden of this tariff," said Harry Root, owner of Grassroots Wine.

click to enlarge Root - RUTA SMITH
  • Ruta Smith
  • Root
"The 100 percent tariffs that they're proposing are effectively prohibition from any wines in the E.U. That means we're going to have Italian restaurants with no Italian wine, French restaurants with no French wine and Spanish restaurants with no Spanish wine," he said.

In a June policy hearing, USTR ambassador Robert Lighthizer said, “I understand there are people that import wine and don’t like the tariffs. On the other hand, many members of this committee and in Congress generally come from areas that have, in my judgment, the best wine in the world and there’s no tariff on any of it.”

According to Root, there isn't a domestic alternative meeting the price and quantity demand for imported wines like pinot grigio and prosecco, and the 100 percent tariff could also lead to the closure of several retail stores.

"The end result is going to be more consolidation at every level," he said.
"For a store like mine it would be impossible if these sorts of tariffs went through," said Monarch Wine Merchants owner Justin Coleman. "We are virtually a full European wine store, so it would make 90 percent of our wines too expensive for what they are."

And switching to a mostly domestic shop wouldn't be as easy as Lighthizer suggested.

click to enlarge 90 percent of the wine at Monarch Wine Merchants would be subject to the 100 percent tariff - PROVIDED
  • Provided
  • 90 percent of the wine at Monarch Wine Merchants would be subject to the 100 percent tariff
"We couldn't just switch to an all American domestic wine store overnight," Coleman said. "It would hurt us getting those as well because we get our domestic wines from the same distributors that we get our European wine from. So this would cut down every piece of our supply chain." 

National advocacy organizations like the United States Wine Trade Alliance are calling on citizens to join the fight against 100 percent tariffs by contacting elected officials in Congress.

The USTR is expected to make a decision on the tariff in August.

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