Trump's tariffs on European wine have American businesses begging for relief
Posted January 7, 2020 5:44 p.m. EST
CNN — American wine shop owners and importers already dealing with tariffs on European imports pleaded with US trade officials for relief Tuesday, arguing that adding a 100% tariff on French wine and Champagne threatened by President Donald Trump would devastate their industry.
"My company will surely disappear if 100% tariffs are imposed on European wines," said Jenny Lefcourt, who started her New York City-based import business called Jenny and Francois Selections about 20 years ago
The wine industry is caught up in two separate trade spats.
The Trump administration imposed a 25% tariff on most European wine in October, in retaliation for the subsidies Europe provided to aircraft maker Airbus. Since then, the administration has threatened to raise the rate because of a lack of progress in resolving the issue.
Trump has also threatened a new tariff on sparkling French wine, including Champagne, to punish France for imposing a tax on digital services. A report released by the US Trade Representative's Office last month found that the tax, which affects large American tech companies like Facebook and Google, represents a barrier to trade.
But unlike other imports targeted by Trump -- Chinese-made industrial materials, for example -- wines are highly specific. Sellers can't simply substitute a sparkling wine from California for a French Champagne.
"The importance of wine or Champagne lies in the label," said William Tomaszewski, general counsel for Wine.com, an online retailer. "These products are by no means interchangeable," he added.
At the trade office hearing Tuesday, which was meant to focus on the French-related tariffs, many small business owners said that these duties would inflict harm on US companies, workers and consumers -- rather than resolve the US issue with aircraft makers or digital service industry.
"If Google and Facebook have to make a few less billion dollars, it would be a lot less painful than if I have to lose my means of survival," said Mary Taylor, who recently quit her job on Wall Street to start a small importing business called Mary Taylor Wines.
"How can you just gut my family business?" she asked.
The French tariff could lead to smaller profits in the wine industry, triggering layoffs and increasing costs to consumers. The Wine and Spirits Wholesalers of American estimated that a 100% tariff on French sparkling wines would destroy 17,000 American jobs.
So far, consumers might not see a price increase in the store because importers and distributors have absorbed the cost of the already-active 25% tariff -- much as retailers have eaten the cost of Trump's tariffs on Chinese-made goods.
Christy Frank, who runs a wine shop in upstate New York called Copake Wine Works, told CNN that she's seen only some price increases since October.
But, she's finding it hard to place orders. Importers, she said, stopped stocking up as they wait to see what happens with the tariffs -- which they must pay as soon as the wine enters a US port, creating a potential cash flow problem.
"They don't want to be stuck with wine with a huge tariff hanging over their head," she said.
Trump's proposed tariffs would hit a wide range of French goods, totaling $2.4 billion, that also includes makeup, handbags and cookware -- specifically the enameled cast iron pans and dutch ovens sold by Le Creuset.
The company is headquartered in South Carolina but makes most of its cookware in France.
"The very existence of Le Creuset in South Carolina and throughout the US is threatened by the proposal," said recently retired CEO Faye Gooding at the hearing.