Local businesses are keeping a close eye on ongoing trade tensions, as alcohol shapes up to be a key point in the trade war.
On Thursday, March 13, President Donald Trump posted on the Truth Social platform a threat to impose 200% tariffs on alcohol from the European Union. This comes after the region’s 50% tariff on U.S. whiskey, which is in itself a response to the president’s 25% tariffs on steel and aluminum imports that took effect on Wednesday, March 12.
“The European Union, one of the most hostile and abusive taxing and tariffing authorities in the World, which was formed for the sole purpose of taking advantage of the United States, has just put a nasty 50% Tariff on Whisky. If this Tariff is not removed immediately, the U.S. will shortly place a 200% Tariff on all WINES, CHAMPAGNES, & ALCOHOLIC PRODUCTS COMING OUT OF FRANCE AND OTHER E.U. REPRESENTED COUNTRIES. This will be great for the Wine and Champagne businesses in the U.S.,” the post from President Trump read.
At Canal’s Discount Liquor in Pennsauken, New Jersey, General Manager Gary Brady said the store carries many wines from Europe. It’s business as usual for now, Brady said.
“Definitely paying attention, yeah. It’s very important, because what happens is those tariffs will get passed to the consumer. Anytime that happens, it always disrupts your regular retail business,” he said. “As soon as the tariffs go into place, it doesn’t mean our prices go up. We price everything off our last purchase price. We’re not there yet.”
Brady said it’s likely suppliers and distributors currently face more uncertainty than retailers at this point.
“I’m sure the suppliers and distributors are thinking about it more than we are, only because they’re buying the product before they’re selling it to us. So, I think there’s probably a little more concern on their part. Once they commit to that purchase, they own it,” he said.
For some business owners, conversations are already being had around decisions that may come down the road. Marc Grika, chef and owner at DaVinci & Yu, said his restaurant buys all local products but they may still be affected by the ongoing trade war.
“Beer is affected because of the kegs, the metal. I buy canned beer, so that’s going to be affected also because of the metal,” Grika said. “It means we have to debate how much can we raise our prices to offset the prices that we’re now paying. In the restaurants, it’s so hard to do that. During COVID, we didn’t raise our prices during all of those years even though supply chains were crashed. All of our prices skyrocketed.”
Sergei Kostiaev, an assistant teaching professor at Drexel University’s Department of Politics, said a 200% tariff on EU wines could mean the amount of imports from France, for example, will decrease.
“When you impose let’s say a 15% tariff or even a 20%, that can be absorbed. People can still buy their preferred French wine if they like it, but if it’s 200%, it’s basically an embargo on trade,” Kostiaev said. “If some people prefer some exquisite wines which are like 50 years old, those people will probably keep buying them. Normal, average bottle of French wine…it will be a lot more expensive. I anticipate the amount of wine coming to America, it will decrease.”
Ernst Büscher, spokesperson for the German Wine Institute, told NBC News that an interview that a 200% would be a “catastrophe.” Büscher noted that the United States is the most important export market for German winemakers, accounting for about one sixth of exports.
Büscher also told NBC News that when a tariff of 25% was placed on German wines during the first Trump administration, importers and winemakers shared that cost to shield the U.S. and consumers from the price increase. That would likely be impossible with a 200% tariff, according to Büscher.
Chris Swonger, Distilled Spirits Council President and CEO, released the following statement Thursday morning:
“The U.S.-EU spirits sector is the model for fair and reciprocal trade, having zero-for-zero tariffs since 1997. The U.S. spirits sector supports more than $200 billion in economic activity, 1.7 million jobs across production, distribution, hospitality and retail, and the purchase of 2.8 billion pounds of grains from American farmers. We urge President Trump to secure a spirits agreement with the EU to get us back to zero-for-zero tariffs, which benefits the hospitality industry and U.S. craft distillers who export their products. We want toasts not tariffs.”
Source: www.nbcphiladelphia.com…