W-S on tariffs: Time to Stock Up?
https://www.wine-searcher.com/m/2024/11/time-to-stock-up-the-drinks-cabinet
I think what it will do is skew an already weird market. There are still plenty of old vintages in the warehouse, as well as current ones that have not sold such as 2021 and 2022. The tariffs at 10% are not horrible, but at 20%, they will give people with full cellars justify not buying. I have just had e mails from a couple of merchants guaranteeing delivery before any tariffs are enacted, and f delivery is too late, they will pay them. I got a sense of desperation from one of them.
I just opened a storage account in the UK, where rates are actually quite fair, and it will be perfect for any young wines which I am not going to drink in the near future. I can store there, as I don’t see any way the tariffs can continue in the long term.
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FWIW, I’m rushing all my European orders in before the end of the year and talking to the auction house representatives there, that’s what most of their US clients are doing…
With the weather in the UK, you can just store them in a garage or something, so it saves a lot of cost too.
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Not any more. Global warming makes it a slightly risky proposition.
Cost of garages is prohibitive.
And I love my relatives, but why tempt them.
Ben Aneff posted this on Facebook, and thought everyone should see this-
Dear Friends and Colleagues,
I wanted to write a note to update you on the tariff front after the results of the election.
For several months now, we’ve prepared our approach with a Trump victory scenario in mind. Our industry has risks, but we are in a significantly better place now, thanks to your support, than we were in 2019.
Since July, we have been working with our team at Akin Gump to identify key targets that could be influential on trade matters in the new administration. Many of these are members in Congress who have purview over trade, or are thought to have the ear of President Trump or his trade team. In a nutshell, our work boils down to showing key members of the incoming administration how tariffs on wine do more harm to domestic businesses, than to businesses abroad. For members of Congress, we use their constituent businesses to help tell that story, which is particularly effective. Because of the three tier system, for every $1 the U.S. sends to Europe for wine, U.S. companies receive $4.52 in revenue. This is a strong contrast with the other potential targets of retaliatory tariffs. It makes tariffs on wine both problematic for U.S. small businesses, and a poor remedy in a trade dispute. This means we have a shot. But we must engage our entire industry to give us the best chance to avoid tariffs.
[If you are not on our email list, please contact Chimene Visser Macnaughtonand she can add you. Let her know your company and location please!]
You can find a list of our current Congressional Engagement Activity at the end of this note. If you or your business has contacts or ties to any of these districts, please let us know.
In addition, we have had several recent meetings with important figures close to the incoming administration. The goal here has not been to simply make our case, but to let them learn about us, and ask their advice on how best to articulate our messages and issues to otherwise tariff-friendly administration members.
WHAT WE HAVE LEARNED:
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Tariffs are a certainty. Tariffs on wine are NOT a certainty.
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Each contact confirmed that members of Congress hearing from local businesses that imported wine is important for their bottom line (restaurants particularly, and other small businesses), and said member telling USTR, is very helpful. This was our modus operandi, but it was useful to hear our efforts were for good purpose.
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The mass email campaigns worked. All told me independently that members of USTR and Congress learned a great deal about the damage wine tariffs do on US businesses, and that it matters.
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All told me that “fairness” in trade was an important message. Republican trade officials largely believe that Europe is a poor trading partner, that actively works to prevent many U.S. goods from being exported into their market. If we can effectively communicate that the wine industry is an exception that works well from a trade perspective - i.e. equal access for US products in Europe etc - that would be an effective addition to our message.
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Surprisingly, they mostly understood the fungibility argument, that U.S. wine is not a substitute for imported wine.
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Perhaps our most important lesson: Industries that sit on the sideline will pay the price. We must not let that be the wine industry.
CURRENT TARIFF RISKS:
Digital Services Taxes: This is our most immediate threat. DSTs are taxes implemented in many countries that, due to high revenue limits, target only U.S. companies. InItially tied to proposed Champagne tariffs, the situation is now worse than during Trump’s first term. France collects $1.3 Billion in DSTs from U.S. companies. Austria, Italy, Spain, and The UK also collect DSTs from US Companies. Some Republican trade advocates prefer targeting foreign service entities (e.g., French advertising firms), rather than unrelated products.
Airbus: The Airbus dispute is less likely to be addressed immediately. Though the dispute is paused until 2026, it’s currently seen as lower priority in DC. However, the 2026 date is not set in stone. The pause was an executive order by President Biden, and could thus be undone by an executive order. We do not believe they would snap back to the previous list automatically - it has been “expunged” so in theory the process of determination should begin again.
Universal Tariff: There is a non-zero chance of a 10% [estimated] broad tariff across all imported products. This would be quite difficult to implement, but not impossible. In this instance, there could also be the possibility for exclusions.
Uncertainty: In a Trump administration, there is an element of uncertainty that will exist.
Time Frame: We are seeking more clarity around when any tariffs could be put in place. For DST for instance, there is typically an investigatory process of roughly 9 months before implementation. It is possible they could look to reduce that time to perhaps 3 months. We believe it most likely that a new USTR would be in place - figure March or April - before any tariffs would be implemented. We do not have hard and fast information hear, but are working to learn more.
HOW YOU CAN HELP
First and foremost, we need your participation. Retaliatory tariffs are zero-sum. It’s us, or it’s them. They will choose, in the instance of French DSTs, $1.3 Billion in French products or services to tariff. Our job is to show them that there are more effective options to tariff than wine. If you have contacts in the below target districts (or any you think useful), we will need your help. Ties to good local restaurants are particularly useful. We are lucky that ours is a story Congress wants to hear. The hospitality industry has spent generations making people smile, and we are one of the few industries that people in Congress are HAPPY to hear from. Everyone has a favorite restaurant, and can identify with a local small business that depends on imported wine. We need your help to make ever more connections. Your efforts can have a real impact.
In summary, there are now foreseeable risks in front of us, but we are in as good a place now as we could hope to be. The work we did last round was incredibly helpful, and laid the groundwork for our messaging now. It doesn’t mean we don’t have a great deal of hard work in front of us, but we are much better positioned than we ever have been. But make no mistake, we must all pull together to give us the best chance. And remember: Once tariffs are in place they are incredibly difficult to remove, so it is in our best interest to front-load our work now.
If you are not on our email list, please contact Chimene Visser Macnaughton.
P.S. Please see below for our Congressional engagement activity so far. If you have ties to these districts, please let us know.
CONGRESSIONAL ENGAGEMENT ACTIVITIES
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Chairman GT Thompson (R-PA) – UC Davis visit on viticulture challenges and tariff impact
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Rep. Claudia Tenney (R-NY) – Fox Run Vineyards visit, discussing tariff impacts.
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Rep. Mike Kelly (R-PA) – Mazza Vineyards visit, with a focus on tariffs and supply chain issues.
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Senator Mike Crapo (R-ID) – Staff engaged at the Idaho Wine Commission roundtable on tariffs and small winery challenges.
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Senator John Cornyn (R-TX) – Central Texas Regional Director visit at William Chris Wine Company and a D.C. advisor attending the Skurnik event.
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Rep. Kevin Hern (R-OK) – Upcoming industry visit in Tulsa in progress.
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Florida Delegation:Senator Marco Rubio (R-FL)
Senator Rick Scott (R-FL)
Rep. Vern Buchanan (R-FL)
Rep. Byron Donalds (R-FL)
Arrangements underway for a Miami visit. -
Rep. Jason Smith (R-MO) – Coordination with St. James Winery and Cape Girardeau for a meeting; staff advisor attended Skurnik event.
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Senators Bill Hagerty (R-TN) & Marsha Blackburn (R-TN) – Engagement plans with local partners in Tennessee.
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Rep. Dan Meuser (R-PA) – Meeting being arranged with local groups.
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Rep. Brian Fitzpatrick (R-PA) – Visit setup underway with local industry stakeholders.
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Rep. Lloyd Smucker (R-PA) – Plans to meet with local groups.
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Sen. Steve Daines (R-MT) – Seeking local partners for a visit.
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Rep. Jodey Arrington (R-TX) – Staff member attended the Skurnik event in D.C., seeking local partner for Lubbock or Abilene, TX event
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Sen. John Thune (R-SD) – Seeking local partners for future engagement.
The $1 to $4.52 is ugly. No wine consumer will be happy with seeing that number out in the open, nor should they be.
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It is quite the argument - “Because most states mandate we use multiple layers of distribution and insulate at least one of those layers from meaningful competition (other than competition from temperance), consumers really get shafted out of money that goes to companies that are legislatively protected from the marketplace, and it would be unfair to shaft consumers out of even more money that goes to the government.”
OTOH, it does have the benefit of being accurate.
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We need to tackle one issue at a time. 
Let’s not increase the price of wine through something that can be controlled, then we can tackle the three tier system.
BTW, that number does include part of the retail margin too, so that’s not just the numbers in the middle.
I did my part in the letter-writing campaign last time and as I recall that figure includes everything they could lard in there as they wanted to make it as large as possible. I think it includes not only a retail margin but it is based on restaurant sales, so the retail margin is 3x wholesale. It didn’t work last time, hopefully it does this time.
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Is that actually the case?
I’m not asking because I’m a fan of trade wars (I’m not), but it does feel at least like European markets, at least outside of maybe England, are not very open to American wines.
Not sure if tarrifs and other government intervention play a role or if it’s all just lack of customer acceptance.
What do we actually know?
For 2022, the U.S. exported about $1.5B of wine, and imported about $7.5B.
Just a data point for reference.
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I actually don’t know. That’s Ben’s writing, not mine.
Sorry I can’t answer that.
March 31, 2025.
I put almost all of it down to customers. In the UK the mass market US budget wines have a decent foothold, but with active competition from all over. For wine enthusiasts there really isn’t much interest, or perceived **value, outside of 2-3 long-term names who have earned a following, with Ridge probably the standout.
**Tariffs not the issue, the US market values its wines higher than the market over here has interest in.
Move across to Italy, and the customer perception of US wines is even harsher. I’m sure France is similar.
A shame, as there’s more variety in US wines than the hi octane cult Cali cab image that prevails amongst wine enthusiasts. It’s just such a hard sell to break free from that perception.
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Think about how expensive most halfway decent American wines are. Now make them even more expensive for the export markets. The economics don’t make sense for all but the most unique of wines and most are… not that.
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The Tuscan region is on a roll with several successful vintages so I will be loading up, along with who knows what is going to happen in the Scotch and Tequila market. Costco could be in short supply in January.
The export market for American wine has an extremely narrow band, especially in Europe. Under, say, ~$50 retail, local production makes American wines totally uncompetitive. That is regardless of any tariffs that might exist. Between production costs and shipping almost half-way around the world, local wines will always offer better value.
Over ~$250 retail, American ‘cults’ are not viable, as other countries simply don’t care about the Latest Greatest Napa Valley clone of the previous Latest Greatest Napa Valley clone of Dreaming Beagle, Harlan, or [old] MacDonald. Please see extensive, exhaustive recent thread.
If you’re established, excellent and not crazy in price, there can be a market. Think Mayacamas, Montelena, Mount Eden.
Otherwise, don’t think about it.
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Or here either. 
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