Photo: Natalia Van Doninck/Shutterstock

New 25% Trump Tariff Raises the Price of Your Favorite European Wines, Whiskey, and Cheeses

News Food + Drink
by Nickolaus Hines Oct 3, 2019

If you fell in love with certain meats, cheeses, and wines on your last trip to Europe, finding those products at home could soon get a lot more expensive. On October 2, President Donald Trump announced a 25 percent tariff on goods like French wine, Scotch whisky, and pork products that’s set to take effect on October 18.

You can find the full 23-page list of goods Trump is threatening to add a new tariff on here. Much is in the luxury category, which happens to also include the food and drinks we fall in love with when traveling. This includes things like salami, yogurt, cookies, sausage, coffee, cheese, whiskey, wine, Champagne, olives, fruit, brandies like Cognac — you get the point.

Food and beverages are simply caught in the crosshairs of the dispute, which is actually about airplanes. It all goes back to 2004, a simpler time when Trump was working on the first season of The Apprentice and new trade wars weren’t weekly news. That year, the European Union claimed the US gave Boeing $19 billion in subsidies between 1989 and 2006 that unfairly hurt competition. Shortly after, the US claimed the EU did the same for Airbus. The World Trade Organization agrees with both the US and the EU, saying both Boeing and Airbus subsidies violated WTO rules.

The latest tariffs are purportedly designed to match the monetary loss that the EU’s subsidies caused to the US economy and US companies like Boeing. The WTO puts the value of that loss at $7.5 billion.

All hope isn’t lost. According to Reuters, the US Trade Representative’s Office will “continually re-evaluate these tariffs based on our discussions with the EU.” The list is shorter than the original tariff of 100 percent on $25 billion of goods that was discussed in September.

“When the EU ends these harmful subsidies, the additional US duties imposed in response can be lifted,” a government representative told CNN in a statement.

Even if the tariffs don’t happen, uncertainty is hurting the markets. The European Commission cut economic growth forecast to 1.5 percent in part because of “increased uncertainty regarding trade policies.”

If the tariffs do happen, you won’t see prices impacted immediately. Importers have warehoused goods already in the US that will be sold at the same price. Eventually, however, prices will raise as importers start to pay the added tariffs on goods. The increased cost of doing business will be passed on to consumers. Markets are complicated, and a 25 percent tariff doesn’t necessarily translate to a 25 percent rise in consumer costs. Some merchants, for example, could try and wait it out by absorbing the costs of the tariff and taking a smaller profit margin. But for the most part, prices will go up.

The European side of this will likely be hurt as well. As prices go up, people buy less, so importers buy less. When importers buy less, the producers don’t have as many places to sell their goods and businesses are hurt. Take Scotch whisky, for example. More than $1.2 billion of Scotch was exported to the US in 2018, according to the Scotch Whisky Association. Single malt Scotch is half of the value of items from the UK that Trump is threatening to put a tariff on.

“The tariff will put our competitiveness and Scotch whisky’s market share at risk,” the SWA said in a statement. “We are also concerned that it will disproportionately impact smaller producers. We expect to see a negative impact on investment and job creation in Scotland, and longer-term impacts on productivity and growth across the industry and our supply chain.”

The same is true for everything else on the list. For now, the only thing to do is wait, preferably while reminiscing on your last trip to Europe with a glass of French wine and a massive cheese and charcuterie board. Oh, and call your congressperson.

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