US to impose 25% tariff on European wine, cheese, etc.

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Robert M yers
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Re: US to impose 25% tariff on European wine, cheese, etc.

#251 Post by Robert M yers » October 5th, 2019, 2:24 am

Seems like a reasonable resolution might be to split the tariff between retailer and customer even if customer is free and clear legally. 25% seems like it would wipe any profit out, but half that might make it feasible to stay afloat while still making a sliver of profit in a bad situation. When I am approached and if asked for input I think this seems fair, 12.5% sucks but shouldn’t be enough to sink either party until the system can figure out the economics.

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Re: US to impose 25% tariff on European wine, cheese, etc.

#252 Post by James Billy » October 5th, 2019, 2:38 am

Champagne can't be subject to tariffs as it's a carbonated drink. newhere champagne.gif

Maybe the subsidies will be used to fix all those Boeing 737 Max planes [snort.gif]

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Re: US to impose 25% tariff on European wine, cheese, etc.

#253 Post by D@vid Bu3ker » October 5th, 2019, 6:04 am

Robert M yers wrote:
October 4th, 2019, 8:46 pm
Couldn’t the procurement of luxury items just hold off on import until after the allowed amount has been met each year? Let the industry who cannot afford to wait pay the tax first...will it become a waiting game?
Careful. Schemes to avoid tariffs are illegal, and industry coordination to do so (outside of official duty mitigation programs) risks severe penalties.
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Re: US to impose 25% tariff on European wine, cheese, etc.

#254 Post by James FS » October 5th, 2019, 11:49 am

D@vid Bu3ker wrote:
October 4th, 2019, 4:17 pm
James FS wrote:
October 4th, 2019, 3:25 pm
FWIW, I was recently in Bordeaux and speaking to a person in the French wine industry about the proposed tariffs at that time, which Trump was touting at 100%. Thankfully, that did not come to pass, however 25% did. I asked her if she thought it was fair for Trump to go after French wine. Surprisingly, her reply was yes. She said that the French had quite a high tariff on American wines shipped into their country but the US had a very low tariff on French wines going the other way. She thought that if the French thought their wines were better they would agree to compete on an even playing field. I also agree. How can two developed economies selling the same product have such differing tariffs? It doesn't end there. For decades and decades the French, and the rest of Europe, underspent on defense because they knew that the US would be able to keep the USSR/Russia at arms length. Now they have bloated social programs they can never hope to pay for and finally we have a President willing to stand up for our people. There is only one producer of French wines I will not go back for at the current tariffs. The rest of them? Let them suffer.
The EU tariff on US wine is 29 cents per bottle.
Yes, and the US tariff on French wine is 5 cents per bottle. Nearly 6x. This sort of thing is happening across a broad range of products. When you consider the amount of trade between the EU and the US those small numbers start to add up fast.
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Re: US to impose 25% tariff on European wine, cheese, etc.

#255 Post by Patrick Stella » October 5th, 2019, 12:17 pm

A.Gillette wrote:
October 4th, 2019, 3:28 pm
Frank Murray III wrote:
October 4th, 2019, 2:48 pm
Damn, I feel for some of you cats that buy a lot of still french wines. Getting sucked up into something like this stinks.
I feel bad for the small business owners but as a consumer who buys primarily French and German wine, this strikes me as potentially the best buying opportunity of my life. I’m going to take additional storage on Europe. Burgundy en primeur is in January. If this continues demand will shrink. I will load up and secure additional allocations. This is a temporary blip any way you look at it.
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Alex,

I think your logic is sound, but I'm not sure you should get your hope too high. A lot--perhaps even most--of the collectors buying high end burgundy already buy on both sides of the Atlantic and have ample storage in London and in France. I think for most big collectors this just means a little more wine will sit at Octavian until the tariffs get resolved and then it will all get shipped over. People already buy in Europe, wait to build up a bit of quantity to get decent shipping rates, and then make big shipments to the US. That is certainly what I will do, and I think that's pretty much everyone's plan.
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Re: US to impose 25% tariff on European wine, cheese, etc.

#256 Post by D@vid Bu3ker » October 5th, 2019, 12:36 pm

James FS wrote:
October 5th, 2019, 11:49 am
D@vid Bu3ker wrote:
October 4th, 2019, 4:17 pm
James FS wrote:
October 4th, 2019, 3:25 pm
FWIW, I was recently in Bordeaux and speaking to a person in the French wine industry about the proposed tariffs at that time, which Trump was touting at 100%. Thankfully, that did not come to pass, however 25% did. I asked her if she thought it was fair for Trump to go after French wine. Surprisingly, her reply was yes. She said that the French had quite a high tariff on American wines shipped into their country but the US had a very low tariff on French wines going the other way. She thought that if the French thought their wines were better they would agree to compete on an even playing field. I also agree. How can two developed economies selling the same product have such differing tariffs? It doesn't end there. For decades and decades the French, and the rest of Europe, underspent on defense because they knew that the US would be able to keep the USSR/Russia at arms length. Now they have bloated social programs they can never hope to pay for and finally we have a President willing to stand up for our people. There is only one producer of French wines I will not go back for at the current tariffs. The rest of them? Let them suffer.
The EU tariff on US wine is 29 cents per bottle.
Yes, and the US tariff on French wine is 5 cents per bottle. Nearly 6x. This sort of thing is happening across a broad range of products. When you consider the amount of trade between the EU and the US those small numbers start to add up fast.
So what. It’s 29 cents. This is not the kind of thing to focus on. It’s a red herring.
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Re: US to impose 25% tariff on European wine, cheese, etc.

#257 Post by Scott Brunson » October 5th, 2019, 12:45 pm

James FS wrote:
October 5th, 2019, 11:49 am
D@vid Bu3ker wrote:
October 4th, 2019, 4:17 pm
James FS wrote:
October 4th, 2019, 3:25 pm
FWIW, I was recently in Bordeaux and speaking to a person in the French wine industry about the proposed tariffs at that time, which Trump was touting at 100%. Thankfully, that did not come to pass, however 25% did. I asked her if she thought it was fair for Trump to go after French wine. Surprisingly, her reply was yes. She said that the French had quite a high tariff on American wines shipped into their country but the US had a very low tariff on French wines going the other way. She thought that if the French thought their wines were better they would agree to compete on an even playing field. I also agree. How can two developed economies selling the same product have such differing tariffs? It doesn't end there. For decades and decades the French, and the rest of Europe, underspent on defense because they knew that the US would be able to keep the USSR/Russia at arms length. Now they have bloated social programs they can never hope to pay for and finally we have a President willing to stand up for our people. There is only one producer of French wines I will not go back for at the current tariffs. The rest of them? Let them suffer.
The EU tariff on US wine is 29 cents per bottle.
Yes, and the US tariff on French wine is 5 cents per bottle. Nearly 6x. This sort of thing is happening across a broad range of products. When you consider the amount of trade between the EU and the US those small numbers start to add up fast.
Oh please
Raise the US tariff 24 cents to even the score.
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Re: US to impose 25% tariff on European wine, cheese, etc.

#258 Post by Victor Hong » October 5th, 2019, 12:48 pm

How about a tariff on elected officials?
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Re: US to impose 25% tariff on European wine, cheese, etc.

#259 Post by D@vid Bu3ker » October 5th, 2019, 12:51 pm

Scott Brunson wrote:
October 5th, 2019, 12:45 pm
James FS wrote:
October 5th, 2019, 11:49 am
D@vid Bu3ker wrote:
October 4th, 2019, 4:17 pm


The EU tariff on US wine is 29 cents per bottle.
Yes, and the US tariff on French wine is 5 cents per bottle. Nearly 6x. This sort of thing is happening across a broad range of products. When you consider the amount of trade between the EU and the US those small numbers start to add up fast.
Oh please
Raise the US tariff 24 cents to even the score.
Clearly not vindictive enough.
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Re: US to impose 25% tariff on European wine, cheese, etc.

#260 Post by Scott Brunson » October 5th, 2019, 12:55 pm

D@vid Bu3ker wrote:
October 5th, 2019, 12:51 pm
Scott Brunson wrote:
October 5th, 2019, 12:45 pm
James FS wrote:
October 5th, 2019, 11:49 am


Yes, and the US tariff on French wine is 5 cents per bottle. Nearly 6x. This sort of thing is happening across a broad range of products. When you consider the amount of trade between the EU and the US those small numbers start to add up fast.
Oh please
Raise the US tariff 24 cents to even the score.
Clearly not vindictive enough.
So do 25 cents
#winning [wink.gif]
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Re: US to impose 25% tariff on European wine, cheese, etc.

#261 Post by D@vid Bu3ker » October 5th, 2019, 1:04 pm

And that’s largely the issue. The USA is now treating trade deficits and surpluses as a way to keep score among nations.

Unfortunately it has much more to do with what products people want, and the economic forces (i.e. Wall St. expectations) of constantly growing profit lines.

The only losers in the game are consumers. There really are no winners.
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Re: US to impose 25% tariff on European wine, cheese, etc.

#262 Post by A.Gillette » October 5th, 2019, 1:36 pm

Patrick Stella wrote:
October 5th, 2019, 12:17 pm
A.Gillette wrote:
October 4th, 2019, 3:28 pm
Frank Murray III wrote:
October 4th, 2019, 2:48 pm
Damn, I feel for some of you cats that buy a lot of still french wines. Getting sucked up into something like this stinks.
I feel bad for the small business owners but as a consumer who buys primarily French and German wine, this strikes me as potentially the best buying opportunity of my life. I’m going to take additional storage on Europe. Burgundy en primeur is in January. If this continues demand will shrink. I will load up and secure additional allocations. This is a temporary blip any way you look at it.
A
Alex,

I think your logic is sound, but I'm not sure you should get your hope too high. A lot--perhaps even most--of the collectors buying high end burgundy already buy on both sides of the Atlantic and have ample storage in London and in France. I think for most big collectors this just means a little more wine will sit at Octavian until the tariffs get resolved and then it will all get shipped over. People already buy in Europe, wait to build up a bit of quantity to get decent shipping rates, and then make big shipments to the US. That is certainly what I will do, and I think that's pretty much everyone's plan.

Sure, but that’s just going to be a constant in terms of demand. I’m talking about the US retailers who import tons of burgundy and sell to customers in the US. Maybe they have the cash flow to buy and hold overseas without knowing when they can sell, or maybe they can successfully pass on the tariff. We will know for sure in January. For now, I’d bet there is an opportunity. 25% is a lot.
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Re: US to impose 25% tariff on European wine, cheese, etc.

#263 Post by Mike Miller » October 5th, 2019, 1:47 pm

Neal.Mollen wrote:
October 3rd, 2019, 4:58 am
dennis.coronado wrote:
October 3rd, 2019, 4:19 am
Robert Sand wrote:
October 2nd, 2019, 11:50 pm
Simple: thanks to everybody who voted for Trump ....
This goes back 15 years over a complaint to WTO over EU subsidies to Airbus.
A couple of points. No one on this board is less of a fan of the current regime than me, but this is really not his doing. As indicated, this WTO proceeding has been pending forever (a tit-for-tat European complaint is also pending, we are almost certain to lose that one, and there will be a commensurate increase in tariffs coming back the other way next year).

Moreover, this is positively anti-Trumpian in its approach to trade. Rather than simply declaring a trade war and imposing tariffs, we (i.e., the US government) pursued the lawful process, litigated the case to its conclusion over a course of years, and got permission to levy the tariffs as damages for harm done by the responding countries.

So yeah, this may be the ONLY instance in which thanking Trump voters is misplaced.
Yes and no. The WTO case only allows us to impose a 25% tariff, it doesn't require it. A more intelligent approach, I would argue, would be to take the WTO judgment and use it as a negotiating tool, with fairly short deadlines, and demand the elimination of some tariff, or non-tariff barrier to trade imposed by the EU. Negotiate a limit to Airbus subsidies. Negotiate an opening in the EU market for U.S. agricultural products. If those concessions are not forthcoming, or insufficient, than impose the tariff. The movement should always be, where possible, toward free trade, not away from it.

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Re: US to impose 25% tariff on European wine, cheese, etc.

#264 Post by Nola Palomar » October 5th, 2019, 2:07 pm

Mike Miller wrote:
October 5th, 2019, 1:47 pm
Neal.Mollen wrote:
October 3rd, 2019, 4:58 am
dennis.coronado wrote:
October 3rd, 2019, 4:19 am


This goes back 15 years over a complaint to WTO over EU subsidies to Airbus.
A couple of points. No one on this board is less of a fan of the current regime than me, but this is really not his doing. As indicated, this WTO proceeding has been pending forever (a tit-for-tat European complaint is also pending, we are almost certain to lose that one, and there will be a commensurate increase in tariffs coming back the other way next year).

Moreover, this is positively anti-Trumpian in its approach to trade. Rather than simply declaring a trade war and imposing tariffs, we (i.e., the US government) pursued the lawful process, litigated the case to its conclusion over a course of years, and got permission to levy the tariffs as damages for harm done by the responding countries.

So yeah, this may be the ONLY instance in which thanking Trump voters is misplaced.
Yes and no. The WTO case only allows us to impose a 25% tariff, it doesn't require it. A more intelligent approach, I would argue, would be to take the WTO judgment and use it as a negotiating tool, with fairly short deadlines, and demand the elimination of some tariff, or non-tariff barrier to trade imposed by the EU. Negotiate a limit to Airbus subsidies. Negotiate an opening in the EU market for U.S. agricultural products. If those concessions are not forthcoming, or insufficient, than impose the tariff. The movement should always be, where possible, toward free trade, not away from it.
How will that help the poor olive farmer??
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Re: US to impose 25% tariff on European wine, cheese, etc.

#265 Post by Neal.Mollen » October 5th, 2019, 2:09 pm

Mike Miller wrote:
October 5th, 2019, 1:47 pm
Neal.Mollen wrote:
October 3rd, 2019, 4:58 am
dennis.coronado wrote:
October 3rd, 2019, 4:19 am


This goes back 15 years over a complaint to WTO over EU subsidies to Airbus.
A couple of points. No one on this board is less of a fan of the current regime than me, but this is really not his doing. As indicated, this WTO proceeding has been pending forever (a tit-for-tat European complaint is also pending, we are almost certain to lose that one, and there will be a commensurate increase in tariffs coming back the other way next year).

Moreover, this is positively anti-Trumpian in its approach to trade. Rather than simply declaring a trade war and imposing tariffs, we (i.e., the US government) pursued the lawful process, litigated the case to its conclusion over a course of years, and got permission to levy the tariffs as damages for harm done by the responding countries.

So yeah, this may be the ONLY instance in which thanking Trump voters is misplaced.
Yes and no. The WTO case only allows us to impose a 25% tariff, it doesn't require it. A more intelligent approach, I would argue, would be to take the WTO judgment and use it as a negotiating tool, with fairly short deadlines, and demand the elimination of some tariff, or non-tariff barrier to trade imposed by the EU. Negotiate a limit to Airbus subsidies. Negotiate an opening in the EU market for U.S. agricultural products. If those concessions are not forthcoming, or insufficient, than impose the tariff. The movement should always be, where possible, toward free trade, not away from it.
I agree with all of this, but I was addressing a different question.
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Re: US to impose 25% tariff on European wine, cheese, etc.

#266 Post by D@vid Bu3ker » October 5th, 2019, 2:16 pm

While Mike’s point is reasonable, it is unrealistic given certain...umm...personnel issues involved with US trade policy.
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Re: US to impose 25% tariff on European wine, cheese, etc.

#267 Post by John Morris » October 5th, 2019, 2:27 pm

Mike Miller wrote:
October 5th, 2019, 1:47 pm
The WTO case only allows us to impose a 25% tariff, it doesn't require it. A more intelligent approach, I would argue, would be to take the WTO judgment and use it as a negotiating tool, with fairly short deadlines, and demand the elimination of some tariff, or non-tariff barrier to trade imposed by the EU. Negotiate a limit to Airbus subsidies. Negotiate an opening in the EU market for U.S. agricultural products. If those concessions are not forthcoming, or insufficient, than impose the tariff. The movement should always be, where possible, toward free trade, not away from it.
That pretty much sums up the American negotiation aims for the last 20 years.

Does anyone else remember the tariffs on EU cheese that were imposed or threatened under Obama? If they were ever imposed, it was very brief. I can't remember if they were or were announced and then withdrawn.
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Re: US to impose 25% tariff on European wine, cheese, etc.

#268 Post by David K o l i n » October 5th, 2019, 2:34 pm

AndrewH wrote:
October 4th, 2019, 1:57 pm
Greg K wrote:
October 4th, 2019, 12:35 pm
Robert.A.Jr. wrote:
October 4th, 2019, 11:43 am


Respectfully, I don’t get the logic of why the buyer gets a freebie on a tariff neither the seller nor buyer could have anticipated at time of contracting or had any control over it. The seller should give the buyer the option of paying the tariff or rescinding the transaction. Do these consumers even have that kind of profit market built into futures? I would think it would be a big loss.
There's a reason a lot of the agreements I draft have provisions for "tax events" [smileyvault-ban.gif]
There are multiple levels of problems. At a minimum both the producer-retailer and retailer-consumer transactions are affected. Just being able to rescind the retailer-consumer transaction leaves the retailer holding the bag. Rescinding the producer-retailer transaction leaves the producer holding the bottles it thought it had sold.

That said, the producer and retailer (and for this include other intermediaries) are sophisticated parties who can easily allocate risk of such an event occurring between them through contract. However that plays out seems of no particular concern. But the retailer-consumer transaction likely doesn't have a contract specifying such unexpected events . . . so for that reason it doesn't seem unreasonable to allow the consumer an option to get out of the transaction.
Absent a contractual tax gross-up or other out in the retailer-consumer contract, the consumer should get the wine at the contracted rate, if the consumer so elects

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Re: US to impose 25% tariff on European wine, cheese, etc.

#269 Post by D@vid Bu3ker » October 5th, 2019, 2:42 pm

John Morris wrote:
October 5th, 2019, 2:27 pm
Mike Miller wrote:
October 5th, 2019, 1:47 pm
The WTO case only allows us to impose a 25% tariff, it doesn't require it. A more intelligent approach, I would argue, would be to take the WTO judgment and use it as a negotiating tool, with fairly short deadlines, and demand the elimination of some tariff, or non-tariff barrier to trade imposed by the EU. Negotiate a limit to Airbus subsidies. Negotiate an opening in the EU market for U.S. agricultural products. If those concessions are not forthcoming, or insufficient, than impose the tariff. The movement should always be, where possible, toward free trade, not away from it.
That pretty much sums up the American negotiation aims for the last 20 years.

Does anyone else remember the tariffs on EU cheese that were imposed or threatened under Obama? If they were ever imposed, it was very brief. I can't remember if they were or were announced and then withdrawn.
The cheese tariff increases were one of Bush II’s last acts. It was Obama who removed them after some brief negotiations resulting in more US beef into the EU.
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Re: US to impose 25% tariff on European wine, cheese, etc.

#270 Post by John Morris » October 5th, 2019, 3:22 pm

Thanks, David. I'd forgotten it was that long ago.
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Re: US to impose 25% tariff on European wine, cheese, etc.

#271 Post by Dan Kravitz » October 5th, 2019, 3:57 pm

to D@vid Bu3ker, you wrote: "The only losers in the game are consumers."

I beg to differ.

I have run my small wine importing business for 34 3/4 years. I currently have 13 full time employees, 4 part time employees and outsource some work to other businesses.

If these tariffs go through and stay in place for more than a short period of time, I might have to close my business before the end of the year, throwing at least 13 people out of work. I know that it is not hard to find a job today, but all of my full-time employees make over $20 an hour with full benefits. That is not true of all jobs. If the tariffs kick in and stay in place for a month or more, I might keep the business going on a much reduced basis, laying off at least 10 people.

If the tariffs come into effect, which I expect, I will keep all of my employees on for at least a month in hopes that they will be negotiated away.

I don't want to cry in my beer, but if the tariffs come into effect and stay for more than a month, I expect a very serious decline in my income, at 73 years of age. I will not personally go bankrupt, nor will I live my latter years in poverty. I am not devoid of assets. But my quality of life will suffer a serious negative impact, including a loss of my ability to drink wines of the quality to which I have become accustomed.

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Re: US to impose 25% tariff on European wine, cheese, etc.

#272 Post by D@vid Bu3ker » October 5th, 2019, 4:07 pm

No, you’re right Dan. It’s more than consumers.

But the tariffs never really do what they are supposed to do.
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Re: US to impose 25% tariff on European wine, cheese, etc.

#273 Post by Craig G » October 5th, 2019, 4:21 pm

Robert.A.Jr. wrote:
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Phuck. I have to go back to Ovid?
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Re: US to impose 25% tariff on European wine, cheese, etc.

#274 Post by A.Gillette » October 5th, 2019, 4:35 pm

D@vid Bu3ker wrote:
October 5th, 2019, 1:04 pm
The only losers in the game are consumers.
The long-suffering drinkers of French wines and wearers of English bespoke clothing?
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Re: US to impose 25% tariff on European wine, cheese, etc.

#275 Post by Dan Kravitz » October 5th, 2019, 4:47 pm

to D@vid Bu3ker,

Thanks for recognizing that there are losers other than consumers.

I don't agree that tariffs never do what they are supposed to do. In fact, these may well accomplish their goal, which is more equitable trading arrangements between the US and Europe. But I really hate being collateral damage, and collateral damage is all too prevalent in these situations.

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Re: US to impose 25% tariff on European wine, cheese, etc.

#276 Post by D@vid Bu3ker » October 5th, 2019, 4:57 pm

Dan - these tariffs won’t work. They will only escalate existing tensions.

Any changes will be superficial at best, allowing the irresponsible politicians to save face.
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Re: US to impose 25% tariff on European wine, cheese, etc.

#277 Post by RichardFlack » October 5th, 2019, 5:34 pm

D@vid Bu3ker wrote:
October 5th, 2019, 1:04 pm
And that’s largely the issue. The USA is now treating trade deficits and surpluses as a way to keep score among nations.

Unfortunately it has much more to do with what products people want, and the economic forces (i.e. Wall St. expectations) of constantly growing profit lines.

The only losers in the game are consumers. There really are no winners.
I thought saving rates were a big factor in overall deficits. Victor will probably correct me.

Luckily I have no dog in this hunt (unless shipments get diverted to Canada at discounted rates). Just waiting for the law of unintended consequences to kick in.

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Re: US to impose 25% tariff on European wine, cheese, etc.

#278 Post by RichardFlack » October 5th, 2019, 5:37 pm

Nola Palomar wrote:
October 5th, 2019, 2:07 pm
Mike Miller wrote:
October 5th, 2019, 1:47 pm
Neal.Mollen wrote:
October 3rd, 2019, 4:58 am


A couple of points. No one on this board is less of a fan of the current regime than me, but this is really not his doing. As indicated, this WTO proceeding has been pending forever (a tit-for-tat European complaint is also pending, we are almost certain to lose that one, and there will be a commensurate increase in tariffs coming back the other way next year).

Moreover, this is positively anti-Trumpian in its approach to trade. Rather than simply declaring a trade war and imposing tariffs, we (i.e., the US government) pursued the lawful process, litigated the case to its conclusion over a course of years, and got permission to levy the tariffs as damages for harm done by the responding countries.

So yeah, this may be the ONLY instance in which thanking Trump voters is misplaced.
Yes and no. The WTO case only allows us to impose a 25% tariff, it doesn't require it. A more intelligent approach, I would argue, would be to take the WTO judgment and use it as a negotiating tool, with fairly short deadlines, and demand the elimination of some tariff, or non-tariff barrier to trade imposed by the EU. Negotiate a limit to Airbus subsidies. Negotiate an opening in the EU market for U.S. agricultural products. If those concessions are not forthcoming, or insufficient, than impose the tariff. The movement should always be, where possible, toward free trade, not away from it.
How will that help the poor olive farmer??
Er where is said olive farmer located, California or Spain? [stirthepothal.gif]

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Re: US to impose 25% tariff on European wine, cheese, etc.

#279 Post by Dan Kravitz » October 5th, 2019, 5:54 pm

RichardFlack wrote:
October 5th, 2019, 5:37 pm
Nola Palomar wrote:
October 5th, 2019, 2:07 pm
Mike Miller wrote:
October 5th, 2019, 1:47 pm


Yes and no. The WTO case only allows us to impose a 25% tariff, it doesn't require it. A more intelligent approach, I would argue, would be to take the WTO judgment and use it as a negotiating tool, with fairly short deadlines, and demand the elimination of some tariff, or non-tariff barrier to trade imposed by the EU. Negotiate a limit to Airbus subsidies. Negotiate an opening in the EU market for U.S. agricultural products. If those concessions are not forthcoming, or insufficient, than impose the tariff. The movement should always be, where possible, toward free trade, not away from it.
How will that help the poor olive farmer??
Er where is said olive farmer located, California or Spain? [stirthepothal.gif]
Or Argentina, or Spain, or Turkey? I'm leaving out a lot of countries.

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Re: US to impose 25% tariff on European wine, cheese, etc.

#280 Post by Dan Kravitz » October 5th, 2019, 5:56 pm

to David Bueker,

IMO tariffs, intelligently and precisely applied, can be useful. But also IMO 'intelligently' is not a word that applies to this administration.

You need to pick your battles, not go to war with the whole world at the same time. This is an idiocracy, which is not a political statement, simply an observation.

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Re: US to impose 25% tariff on European wine, cheese, etc.

#281 Post by D@vid Bu3ker » October 5th, 2019, 6:14 pm

That was my point. Right now tariffs are the financial equivalent of nuclear war. Nobody wins.
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Re: US to impose 25% tariff on European wine, cheese, etc.

#282 Post by Robert.A.Jr. » October 5th, 2019, 7:14 pm

Craig G wrote:
October 5th, 2019, 4:21 pm
Robert.A.Jr. wrote:
October 2nd, 2019, 7:11 pm
Phuck. I have to go back to Ovid?
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Re: US to impose 25% tariff on European wine, cheese, etc.

#283 Post by Howard Cooper » October 5th, 2019, 8:03 pm

Robert M yers wrote:
October 5th, 2019, 2:24 am
Seems like a reasonable resolution might be to split the tariff between retailer and customer even if customer is free and clear legally. 25% seems like it would wipe any profit out, but half that might make it feasible to stay afloat while still making a sliver of profit in a bad situation. When I am approached and if asked for input I think this seems fair, 12.5% sucks but shouldn’t be enough to sink either party until the system can figure out the economics.
I think your math seems off. Let us say wine sold from France to US for $10. Wholesaler sells to retailer for $15. Retailer sells for $20 (wouldn’t this be low retailer markup?). Wouldn’t tariff be $2.50. So, it would not be 25% of retail, would it? And, why would it be fair for the retailer and customer to split the tariff and for the winery and middlemen not to bear any cost?
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Re: US to impose 25% tariff on European wine, cheese, etc.

#284 Post by Robert M yers » October 5th, 2019, 8:43 pm

I thought the same math as you originally (I deleted my post right after), but it was explained up thread although there are nuances I still don't follow.

I think it’s also assumed that the system will absorb some of the tariff. I order quite a bit from direct small direct importers and I’d hate to see these guys lose their neck over this. So Whatever the final Talley is after they get the wine I’d be satisfied to split the costs with those guys. I’m not sure I’d care so much about the Total Wine type players though.

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Re: US to impose 25% tariff on European wine, cheese, etc.

#285 Post by Alan Rath » October 5th, 2019, 8:49 pm

It all depends on what kind of business it is, and what margin is demanded of the business. A small family run business could probably get away with just passing the tariff costs straight through no mark up. A large business that runs on margin will treat the tariff as just another COGS and mark it up along with the actual COGS. I don't know how banks and lenders treat this, or if that's a factor. I know in my business we sometimes passed through certain costs without requiring the normal margin on them, all up to the GM of the business.
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Re: US to impose 25% tariff on European wine, cheese, etc.

#286 Post by Nola Palomar » October 5th, 2019, 9:13 pm

Howard Cooper wrote:
October 5th, 2019, 8:03 pm
Robert M yers wrote:
October 5th, 2019, 2:24 am
Seems like a reasonable resolution might be to split the tariff between retailer and customer even if customer is free and clear legally. 25% seems like it would wipe any profit out, but half that might make it feasible to stay afloat while still making a sliver of profit in a bad situation. When I am approached and if asked for input I think this seems fair, 12.5% sucks but shouldn’t be enough to sink either party until the system can figure out the economics.
I think your math seems off. Let us say wine sold from France to US for $10. Wholesaler sells to retailer for $15. Retailer sells for $20 (wouldn’t this be low retailer markup?). Wouldn’t tariff be $2.50. So, it would not be 25% of retail, would it? And, why would it be fair for the retailer and customer to split the tariff and for the winery and middlemen not to bear any cost?
Winery sells to Importer $10
Importer has his markup and duties which normally is roughly 33% now there is an additional 25% so roughly 58% $10 + $5.80 =$15.80 price to Wholesaler
Wholesale/Distributor margin is roughly 33% now $21.01 as well In the US with the exception of DC it is illegal for an Importer to sell to the Retailer. Retailer or Restaurant has their minimum mark up again roughly 33% = $27.95 No restaurant sells wine for the same price as retail. Someone is going to pay that extra 25%. I import my wine and sell to wholesalers in several States. Every State Liquor control board is different so these number are based on the model I follow and is pretty much to my understanding the industry standard.
Now imagine a 40 ft container with over 19,000 bottles that before had a duty of 6.3cents per liter. 14,850 liters $935.55 in duty before but now it’s value based so 10.00/bottle x 19,000 bottles = $190,000 value X 25% $47,500 in duties due to this tariff change.
I don’t know any importer that has close to $50k per 40ft container to pay for duties in their business model. This is going to turn the import industry on its nose and not just wine. Most importers I know import then sell, it’s not all sold before it lands in the US. You may have some sold, but not the full container. Remarks about whether it’s olives grown in California or somewhere else sorry I find it in rather poor form.

Oh, and duties are paid at the time of import. Either directly by the importer or by surety bond. But it still has to be paid.
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Re: US to impose 25% tariff on European wine, cheese, etc.

#287 Post by Brady Daniels » October 5th, 2019, 9:50 pm

Dan and other board importers, I wish you the best. It’s easy for me and other long-term collectors to view this as a cellar reduction opportunity. It’s annoying for others who are wondering how their overseas wines will be handled, but it’s not the end of the world. But I empathize with the stress this policy must cause you. Hopefully it’s resolved soon. Good luck!
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Re: US to impose 25% tariff on European wine, cheese, etc.

#288 Post by Howard Cooper » October 6th, 2019, 5:10 am

Nola Palomar wrote:
October 5th, 2019, 9:13 pm
Howard Cooper wrote:
October 5th, 2019, 8:03 pm
Robert M yers wrote:
October 5th, 2019, 2:24 am
Seems like a reasonable resolution might be to split the tariff between retailer and customer even if customer is free and clear legally. 25% seems like it would wipe any profit out, but half that might make it feasible to stay afloat while still making a sliver of profit in a bad situation. When I am approached and if asked for input I think this seems fair, 12.5% sucks but shouldn’t be enough to sink either party until the system can figure out the economics.
I think your math seems off. Let us say wine sold from France to US for $10. Wholesaler sells to retailer for $15. Retailer sells for $20 (wouldn’t this be low retailer markup?). Wouldn’t tariff be $2.50. So, it would not be 25% of retail, would it? And, why would it be fair for the retailer and customer to split the tariff and for the winery and middlemen not to bear any cost?
Winery sells to Importer $10
Importer has his markup and duties which normally is roughly 33% now there is an additional 25% so roughly 58% $10 + $5.80 =$15.80 price to Wholesaler
Wholesale/Distributor margin is roughly 33% now $21.01 as well In the US with the exception of DC it is illegal for an Importer to sell to the Retailer. Retailer or Restaurant has their minimum mark up again roughly 33% = $27.95 No restaurant sells wine for the same price as retail. Someone is going to pay that extra 25%. I import my wine and sell to wholesalers in several States. Every State Liquor control board is different so these number are based on the model I follow and is pretty much to my understanding the industry standard.
Now imagine a 40 ft container with over 19,000 bottles that before had a duty of 6.3cents per liter. 14,850 liters $935.55 in duty before but now it’s value based so 10.00/bottle x 19,000 bottles = $190,000 value X 25% $47,500 in duties due to this tariff change.
I don’t know any importer that has close to $50k per 40ft container to pay for duties in their business model. This is going to turn the import industry on its nose and not just wine. Most importers I know import then sell, it’s not all sold before it lands in the US. You may have some sold, but not the full container. Remarks about whether it’s olives grown in California or somewhere else sorry I find it in rather poor form.

Oh, and duties are paid at the time of import. Either directly by the importer or by surety bond. But it still has to be paid.
One can see that from Nola's math that a 25% tariff on a $10 bottle of wine ($2.50) will end up meaning a much larger than $2.50 increase in the retail price of wine as each tier bases its markup on a percentage of the price they paid for the bottle of wine. If the retail price ends up being twice the price charged from winery to importer, a $2.50 tariff results in a $5 increase in the retail price of a bottle of wine.
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Re: US to impose 25% tariff on European wine, cheese, etc.

#289 Post by Nola Palomar » October 6th, 2019, 5:59 am

Howard Cooper wrote:
October 6th, 2019, 5:10 am
Nola Palomar wrote:
October 5th, 2019, 9:13 pm
Howard Cooper wrote:
October 5th, 2019, 8:03 pm


I think your math seems off. Let us say wine sold from France to US for $10. Wholesaler sells to retailer for $15. Retailer sells for $20 (wouldn’t this be low retailer markup?). Wouldn’t tariff be $2.50. So, it would not be 25% of retail, would it? And, why would it be fair for the retailer and customer to split the tariff and for the winery and middlemen not to bear any cost?
Winery sells to Importer $10
Importer has his markup and duties which normally is roughly 33% now there is an additional 25% so roughly 58% $10 + $5.80 =$15.80 price to Wholesaler
Wholesale/Distributor margin is roughly 33% now $21.01 as well In the US with the exception of DC it is illegal for an Importer to sell to the Retailer. Retailer or Restaurant has their minimum mark up again roughly 33% = $27.95 No restaurant sells wine for the same price as retail. Someone is going to pay that extra 25%. I import my wine and sell to wholesalers in several States. Every State Liquor control board is different so these number are based on the model I follow and is pretty much to my understanding the industry standard.
Now imagine a 40 ft container with over 19,000 bottles that before had a duty of 6.3cents per liter. 14,850 liters $935.55 in duty before but now it’s value based so 10.00/bottle x 19,000 bottles = $190,000 value X 25% $47,500 in duties due to this tariff change.
I don’t know any importer that has close to $50k per 40ft container to pay for duties in their business model. This is going to turn the import industry on its nose and not just wine. Most importers I know import then sell, it’s not all sold before it lands in the US. You may have some sold, but not the full container. Remarks about whether it’s olives grown in California or somewhere else sorry I find it in rather poor form.

Oh, and duties are paid at the time of import. Either directly by the importer or by surety bond. But it still has to be paid.
One can see that from Nola's math that a 25% tariff on a $10 bottle of wine ($2.50) will end up meaning a much larger than $2.50 increase in the retail price of wine as each tier bases its markup on a percentage of the price they paid for the bottle of wine. If the retail price ends up being twice the price charged from winery to importer, a $2.50 tariff results in a $5 increase in the retail price of a bottle of wine.
This tariff is in addition to the original tariff as well so my calculations are low.

What will surely happen is those affected will close shop or suspend their operations. This is untenable for this sector of trade to make up this trade imbalance.
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Re: US to impose 25% tariff on European wine, cheese, etc.

#290 Post by Mark Golodetz » October 6th, 2019, 6:11 am

Nola Palomar wrote:
October 6th, 2019, 5:59 am
Howard Cooper wrote:
October 6th, 2019, 5:10 am
Nola Palomar wrote:
October 5th, 2019, 9:13 pm


Winery sells to Importer $10
Importer has his markup and duties which normally is roughly 33% now there is an additional 25% so roughly 58% $10 + $5.80 =$15.80 price to Wholesaler
Wholesale/Distributor margin is roughly 33% now $21.01 as well In the US with the exception of DC it is illegal for an Importer to sell to the Retailer. Retailer or Restaurant has their minimum mark up again roughly 33% = $27.95 No restaurant sells wine for the same price as retail. Someone is going to pay that extra 25%. I import my wine and sell to wholesalers in several States. Every State Liquor control board is different so these number are based on the model I follow and is pretty much to my understanding the industry standard.
Now imagine a 40 ft container with over 19,000 bottles that before had a duty of 6.3cents per liter. 14,850 liters $935.55 in duty before but now it’s value based so 10.00/bottle x 19,000 bottles = $190,000 value X 25% $47,500 in duties due to this tariff change.
I don’t know any importer that has close to $50k per 40ft container to pay for duties in their business model. This is going to turn the import industry on its nose and not just wine. Most importers I know import then sell, it’s not all sold before it lands in the US. You may have some sold, but not the full container. Remarks about whether it’s olives grown in California or somewhere else sorry I find it in rather poor form.

Oh, and duties are paid at the time of import. Either directly by the importer or by surety bond. But it still has to be paid.
One can see that from Nola's math that a 25% tariff on a $10 bottle of wine ($2.50) will end up meaning a much larger than $2.50 increase in the retail price of wine as each tier bases its markup on a percentage of the price they paid for the bottle of wine. If the retail price ends up being twice the price charged from winery to importer, a $2.50 tariff results in a $5 increase in the retail price of a bottle of wine.
This tariff is in addition to the original tariff as well so my calculations are low.

What will surely happen is those affected will close shop or suspend their operations. This is untenable for this sector of trade to make up this trade imbalance.
Sorry to hear this. I hope this mess gets resolved before the mid October deadline.
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Re: US to impose 25% tariff on European wine, cheese, etc.

#291 Post by Marcu$ Stanley » October 6th, 2019, 6:37 am

Howard Cooper wrote:
October 6th, 2019, 5:10 am
Nola Palomar wrote:
October 5th, 2019, 9:13 pm
Howard Cooper wrote:
October 5th, 2019, 8:03 pm


I think your math seems off. Let us say wine sold from France to US for $10. Wholesaler sells to retailer for $15. Retailer sells for $20 (wouldn’t this be low retailer markup?). Wouldn’t tariff be $2.50. So, it would not be 25% of retail, would it? And, why would it be fair for the retailer and customer to split the tariff and for the winery and middlemen not to bear any cost?
Winery sells to Importer $10
Importer has his markup and duties which normally is roughly 33% now there is an additional 25% so roughly 58% $10 + $5.80 =$15.80 price to Wholesaler
Wholesale/Distributor margin is roughly 33% now $21.01 as well In the US with the exception of DC it is illegal for an Importer to sell to the Retailer. Retailer or Restaurant has their minimum mark up again roughly 33% = $27.95 No restaurant sells wine for the same price as retail. Someone is going to pay that extra 25%. I import my wine and sell to wholesalers in several States. Every State Liquor control board is different so these number are based on the model I follow and is pretty much to my understanding the industry standard.
Now imagine a 40 ft container with over 19,000 bottles that before had a duty of 6.3cents per liter. 14,850 liters $935.55 in duty before but now it’s value based so 10.00/bottle x 19,000 bottles = $190,000 value X 25% $47,500 in duties due to this tariff change.
I don’t know any importer that has close to $50k per 40ft container to pay for duties in their business model. This is going to turn the import industry on its nose and not just wine. Most importers I know import then sell, it’s not all sold before it lands in the US. You may have some sold, but not the full container. Remarks about whether it’s olives grown in California or somewhere else sorry I find it in rather poor form.

Oh, and duties are paid at the time of import. Either directly by the importer or by surety bond. But it still has to be paid.
One can see that from Nola's math that a 25% tariff on a $10 bottle of wine ($2.50) will end up meaning a much larger than $2.50 increase in the retail price of wine as each tier bases its markup on a percentage of the price they paid for the bottle of wine. If the retail price ends up being twice the price charged from winery to importer, a $2.50 tariff results in a $5 increase in the retail price of a bottle of wine.
In a market the freedom to just mechanically mark everything up is constrained by consumer demand...otherwise everyone would just take an infinite markup. People will adjust downward based on what they think the impact on sales will be.

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Re: US to impose 25% tariff on European wine, cheese, etc.

#292 Post by Howard Cooper » October 6th, 2019, 6:44 am

Marcu$ Stanley wrote:
October 6th, 2019, 6:37 am
Howard Cooper wrote:
October 6th, 2019, 5:10 am
Nola Palomar wrote:
October 5th, 2019, 9:13 pm


Winery sells to Importer $10
Importer has his markup and duties which normally is roughly 33% now there is an additional 25% so roughly 58% $10 + $5.80 =$15.80 price to Wholesaler
Wholesale/Distributor margin is roughly 33% now $21.01 as well In the US with the exception of DC it is illegal for an Importer to sell to the Retailer. Retailer or Restaurant has their minimum mark up again roughly 33% = $27.95 No restaurant sells wine for the same price as retail. Someone is going to pay that extra 25%. I import my wine and sell to wholesalers in several States. Every State Liquor control board is different so these number are based on the model I follow and is pretty much to my understanding the industry standard.
Now imagine a 40 ft container with over 19,000 bottles that before had a duty of 6.3cents per liter. 14,850 liters $935.55 in duty before but now it’s value based so 10.00/bottle x 19,000 bottles = $190,000 value X 25% $47,500 in duties due to this tariff change.
I don’t know any importer that has close to $50k per 40ft container to pay for duties in their business model. This is going to turn the import industry on its nose and not just wine. Most importers I know import then sell, it’s not all sold before it lands in the US. You may have some sold, but not the full container. Remarks about whether it’s olives grown in California or somewhere else sorry I find it in rather poor form.

Oh, and duties are paid at the time of import. Either directly by the importer or by surety bond. But it still has to be paid.
One can see that from Nola's math that a 25% tariff on a $10 bottle of wine ($2.50) will end up meaning a much larger than $2.50 increase in the retail price of wine as each tier bases its markup on a percentage of the price they paid for the bottle of wine. If the retail price ends up being twice the price charged from winery to importer, a $2.50 tariff results in a $5 increase in the retail price of a bottle of wine.
In a market the freedom to just mechanically mark everything up is constrained by consumer demand...otherwise everyone would just take an infinite markup. People will adjust downward based on what they think the impact on sales will be.
Assuming we are already in a competitive market, nobody is (for most wines) taking an infinite markup. There are costs to buying, holding and selling wine. For one, wine generally is not sold the moment you buy it. So, in many cases, one borrows money to buy wine and has to pay interest until it is sold and the loan repaid (even if the wine is purchased with equity there are opportunity costs to using the equity to purchase inventory). So, as Dan and Nola have said, if and to the extent a middleman cannot take his normal markup they are taking a hit with the consequences discussed in the posts of these people.
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Re: US to impose 25% tariff on European wine, cheese, etc.

#293 Post by Neal.Mollen » October 6th, 2019, 7:27 am

Mark Golodetz wrote:
October 6th, 2019, 6:11 am
Nola Palomar wrote:
October 6th, 2019, 5:59 am
Howard Cooper wrote:
October 6th, 2019, 5:10 am


One can see that from Nola's math that a 25% tariff on a $10 bottle of wine ($2.50) will end up meaning a much larger than $2.50 increase in the retail price of wine as each tier bases its markup on a percentage of the price they paid for the bottle of wine. If the retail price ends up being twice the price charged from winery to importer, a $2.50 tariff results in a $5 increase in the retail price of a bottle of wine.
This tariff is in addition to the original tariff as well so my calculations are low.

What will surely happen is those affected will close shop or suspend their operations. This is untenable for this sector of trade to make up this trade imbalance.
Sorry to hear this. I hope this mess gets resolved before the mid October deadline.
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Re: US to impose 25% tariff on European wine, cheese, etc.

#294 Post by D@vid Bu3ker » October 6th, 2019, 7:33 am

I don’t even know if there are any ongoing negotiations regarding these tariffs. Haven’t heard of any. Of course everything EU is currently drowned out by the Brexit mess.
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Re: US to impose 25% tariff on European wine, cheese, etc.

#295 Post by Eric Ifune » October 6th, 2019, 10:48 am

Eric Ifune wrote: ↑Fri Oct 04, 2019 4:57 am
Since I currently only buy Portuguese wines, I have no problem. Perhaps you all should too. As good as anything in France for a third the price even without tariffs. :)
Reco’s please-
Eric Ifune wrote: ↑Fri Oct 04, 2019 4:57 am
Since I currently only buy Portuguese wines, I have no problem. Perhaps you all should too. As good as anything in France for a third the price even without tariffs. :)
Name specific wines with vintages.
Which French wines do you prefer? Bordeaux, Burgundy, Rhone, Alsace? I'll can give you excellent replacements for all. Portugal may be a small country, but has huge diversity. It's not just the Douro.

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Re: US to impose 25% tariff on European wine, cheese, etc.

#296 Post by Brady Daniels » October 6th, 2019, 11:18 am

Eric Ifune wrote:
October 6th, 2019, 10:48 am
Eric Ifune wrote: ↑Fri Oct 04, 2019 4:57 am
Since I currently only buy Portuguese wines, I have no problem. Perhaps you all should too. As good as anything in France for a third the price even without tariffs. :)
Reco’s please-
Eric Ifune wrote: ↑Fri Oct 04, 2019 4:57 am
Since I currently only buy Portuguese wines, I have no problem. Perhaps you all should too. As good as anything in France for a third the price even without tariffs. :)
Name specific wines with vintages.
Which French wines do you prefer? Bordeaux, Burgundy, Rhone, Alsace? I'll can give you excellent replacements for all. Portugal may be a small country, but has huge diversity. It's not just the Douro.
Ok, I’ll bite. Which Portuguese wine will replace Burgundy? Would prefer if you start a new thread though. TIA.
-Brady D on CT - Omnivinovore

LawrenceM
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Re: US to impose 25% tariff on European wine, cheese, etc.

#297 Post by LawrenceM » October 7th, 2019, 4:58 am

As a wine buyer in the US, I hope that these tariffs are not here to stay.

Not debating the relative policy merits of this move, from a pure pricing perspective experience elsewhere in the world is that the full amount of the tariffs will not just be passed onto the consumer but actually be amplified in that the base cost of each bottle (including the 25% tariff) will then have margin added to it at each point in the distribution chain. Sure distributors may need to adjust practices, find efficiencies or cut margins, but the end result is at least a 25% cost increase for the consumer. Businesses may absorb this cost in the short term, but that cannot last.

Australia imposes a 29% “wine equalisation tax” on imported wines. Add to that the equivalent of state taxes and 5% general import duty and the impact on the consumer once the bottle has been through the supply chain is relatively dire - EP prices in the US on 2018 Montrose were hovering around US$170 as far as I can see. In Australia the EP price is around US$260 - about 50% more. Size of market and economies of scale no doubt play a part, but the experience for even high volume imports are that they are around 30-50% more expensive in Australia; the floor being roughly the 29% import tax that until now has been the major difference taxation wise between the two importing countries.
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Howard Cooper
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Re: US to impose 25% tariff on European wine, cheese, etc.

#298 Post by Howard Cooper » October 7th, 2019, 5:18 am

Neal.Mollen wrote:
October 6th, 2019, 7:27 am
Mark Golodetz wrote:
October 6th, 2019, 6:11 am
Nola Palomar wrote:
October 6th, 2019, 5:59 am


This tariff is in addition to the original tariff as well so my calculations are low.

What will surely happen is those affected will close shop or suspend their operations. This is untenable for this sector of trade to make up this trade imbalance.
Sorry to hear this. I hope this mess gets resolved before the mid October deadline.
[rofl.gif] [rofl.gif] [rofl.gif] [rofl.gif]

Trade wars are good and easy to win, Mark! Get with the program!
Aren't you tired of winning yet?
Howard

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Sh@n A
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Re: US to impose 25% tariff on European wine, cheese, etc.

#299 Post by Sh@n A » October 7th, 2019, 6:11 am

I imagine most are tired of the political comments
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Re: US to impose 25% tariff on European wine, cheese, etc.

#300 Post by Michae1 P0wers » October 7th, 2019, 8:48 am

For those who are saying that Champagne, Italian wine, and Portuguese wines are not included in the tariffs, I have to wonder if that really matters. Do you expect that importers and retailers will look to offset price increases in French, German, and Spanish wines by also increasing the prices of stock from other countries? Just curious if this will be a good excuse to buy more Italian wine or if imported wine in general is going to go up in cost. For that matter even domestic wine may track upwards as retailers look to offset losses from imports.

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