The U.S.-Europe trade wars are about to hit a beloved target: wine. In retaliation for heavy European subsidies to an aviation company, the Trump administration has raised tariffs on European goods. By the end of this month, that could escalate to a 100% tax on European wines, along with spirits, food products, and clothing.
The proposal has created fear for many in the American beverage and hospitality industry who worry having to double their prices will scare off consumers and ultimately kill jobs. However, defenders of the tariffs say the move is protecting U.S. industry from being taken advantage of by European government.
The Inquirer turned to a local restaurant owner and a Trump campaign adviser to answer: Will the new tariffs hurt or help Pennsylvania businesses?
Harm: These tariffs punish American businesses for unfair European policy.
You might wonder why I’m writing against the administration’s proposed tariffs on wine produced in the EU since, as the owner of Jet Wine Bar and a professional archaeologist who has worked mostly in the Middle East, I am a champion of wines from non-EU countries like Georgia, Turkey, and Lebanon, and a cheerleader for the local, Pennsylvania market. Won’t these tariffs help those other markets?
Not necessarily, but that is irrelevant. I am opposed in principle to these draconian sanctions whose detrimental impact will be felt across the industry as a whole.
I’m not opposed to tariffs in general. They are a legitimate tool sovereign nations can use to protect the interests of their own goods, services, producers, and manufacturers. I own three restaurants in Philadelphia and see merit in certain government rules and regulations that, when uniformly and properly applied, may help small businesses function and, hopefully, thrive. However, there are always questions around the fairness and efficacy of such “protection” in practice. In this case, the problems are apparent.
One glaring issue is that the recipients of these punitive measures are far removed from the aircraft-manufacturing industry, which spurred the tariffs in the first place. An international court verified that unfair actions were taken to benefit Airbus by that company’s component governments (France, Germany, Spain, and England). Those initial tariffs, though taken against the consumer and wine industry rather than the aircraft or industrial manufacturing spheres, were taken in stride by wine producers and importers as a consequence of international trade.
But the new tariffs are more widespread, affecting the food and wine industry across the EU. Those punished remain tangential to the actions being denounced. These tariffs are also far more severe. Initial tariffs were 25% on only some wine products from targeted countries. Now, however, the tariffs would quadruple to 100% and apply to all wine products from EU-member countries. In addition, French champagne is targeted with a 100% tariff as retaliation for unilateral taxation of digital services by the EU on U.S. corporations with significant global reach.
This leads to another problem. Tariffs and other such sanctions are often characterized as punishment against a depersonalized group or criminalized cartel. This “other” is generally not a “known” for whom the public offers sympathy. The focus on foreign wine and foods seems an overt appeal to populism over the conspicuous consumption of a faceless elite.
The proposed sanctions are so onerous that they threaten to impact far more people than the foreign “other” they are meant to punish. They will not protect the domestic economy, nor do they even pretend to do so. They aim to punish state-sponsored policy that unfairly benefited Airbus, yet are directed at an entirely different segment of the economy: wine producers, whose operation is far more decentralized, far more familial, and quite human in scale.
These tariffs fall short of foreign-government targets, and instead cast a wide net hurting U.S. businesses and consumers.
“Choice” in wines will be diminished for American consumers as EU wines become too expensive to import and stock. American businesses will be hurt by these punitive sanctions as the import and distribution system of wine products will be disrupted. In Pennsylvania especially, wine does not flow directly between producer and consumer. Distributors are responsible for the movement of wine from all countries, including the U.S. Diminished markets for import and distribution spells a loss of jobs in the industry. As retaliatory measures, the tariffs fall short of foreign-government targets, and instead cast a wide net hurting U.S. businesses and consumers.
Jill Weber is a professional archaeologist and owner of Philly restaurants Jet Wine Bar, Rex 1516, and Cafe Ynez.
Help: The EU needs to see the U.S. will push back against unfair trade.
If the Trump administration imposes tariffs on European wines, Pennsylvania workers will benefit in the long run. Wine importers and connoisseurs might complain, but President Trump’s refusal to let other countries take advantage of American workers is about much more than just wine.
It’s important to remember that trade between the United States and the European Union exceeded $1.3 trillion in 2018, and the U.S. ran a massive trade deficit of over $100 billion with our EU trading partners. That imbalance isn’t the result of natural market forces, but rather the anticompetitive practices of European governments.
This isn’t the first time President Trump has had to impose retaliatory tariffs on Europe. Last year, the World Trade Organization ruled that French airplane manufacturer Airbus received unfair government subsidies for years, and permitted the U.S. to impose $7.5 billion of retaliatory tariffs against the EU to recoup our losses.
Meanwhile, European governments treat American companies like cash cows.
The EU also places 10% duties on American cars, while we only tax European cars at a 2.5% rate. That disparity has frozen American car companies out of the European market, while giving European manufacturers relatively free access to American consumers. Nonetheless, President Trump has held off on slapping 25% counter-tariffs on European automobiles, which he had threatened to do in order to force the EU to negotiate fair trade terms.
Meanwhile, European governments treat American companies like cash cows. France’s digital tax, designed to punish American tech companies like Facebook and Google for offering their services to European consumers, is precisely the reason President Trump is considering a $2.5 billion counter-tariff.
Although much has been made of the anticipated impact on wine sellers, savvy merchants are stocking up in anticipation of the tariffs taking effect, and more than two-thirds of firms expect growth over the next six months per an analysis from the federal government.
» READ MORE: Don’t tax toys in the misguided tariff war | Opinion
Free trade is great when it’s genuinely free and fair for everyone. The status quo, however, lets other countries profit unfairly at the expense of American workers and businesses.
Tariffs are a tool that the U.S. can use to restore balance to our trade relations. President Trump’s counter-tariffs against China, for instance, recently produced a historic “Phase One” trade agreement that resolves several long-standing disputes between the world’s two largest economies — and commits China to purchasing $200 billion worth of U.S. exports over two years.
Even while tariffs are in effect, they often produce immediate benefits for the economy. Just look at U.S. Steel’s billion dollar investment in Pennsylvania’s Mon Valley Works plant, made possible by President Trump’s tariffs on foreign steel manufacturers who engaged in predatory practices such as dumping. That investment doesn’t just mean more jobs for steelworkers and construction workers, but also more business for local entrepreneurs.
President Trump has demonstrated tact and forbearance in his negotiations with America’s trading partners around the world. His counter-tariffs have forced even the most stubborn protectionists to make concessions, and now the mere threat of tariffs is often enough to get a deal done.
This is about more than just wine; it’s about the long-term health of every aspect of Pennsylvania’s — and the entire country’s — economy. Besides, there’s plenty of excellent wine produced right here in the USA.
David Urban is a commentator for CNN. He served as senior adviser on the 2016 Trump campaign and is a member of the 2020 Trump Advisory Committee.