The Trump Administration has backed off on its threat to raise its European wine tariff to 100 percent – partly because the entire wine industry rallied against the tariffs.
"It was one of the rare cases in the industry when everyone's interests aligned," says Cindy Frank, a long-time wine industry executive who has worked as an importer, wholesaler, producer, and retailer. She testified last month in hearings before the US Trade Representative in opposition to the tariffs. "It's the one issue that has worked itself all the way through the three-tier system.''
The trade representative's office announced on Friday that it would increase the tariff on airplane parts but keep the tariff on wine to 25 percent on select products from France, Spain, Germany, and Great Britain. The Trump Administration had threatened to raise the wine to tariff to 100 percent in the 15-year-old dispute over airplane manufacturing subsidies.
Why was the united lobbying effort so unusual? Because the three-tier system, which regulates alcohol sales in the US, was designed to separate the interests of producers, wholesalers, and retailers and restaurants. What's a problem for one tier may not affect the other tiers at all.
Also, size matters – the biggest companies, regardless of tier, may have more in common with each other than with other members of their tier. During testimony, one small wholesaler suggested that the tariffs only be levied on the biggest French producers, who aren't his clients but work with the biggest distributors.
In addition, most US alcohol regulation takes place on the state level. The tariffs required the industry to lobby on the federal level, something that much of it had little experience with or understanding of.
"I think if you were looking for the journalistic lede for this story, it would be that the entire industry came together," says Southern Glazer's Barkley Stuart, the chairman of the Wine & Spirits Wholesaler Association's board of directors. He also testified during the trade representative hearings against the tariffs. "It was quite something to see and quite impressive. You had big and small working together, wholesalers and suppliers – people that don't always see their interests align."
This is not to say that the wine business doesn't work together, says Stuart Campos of RNDC, the second biggest wholesaler in the country. It does happen, but the issues don't necessarily attract as much attention.
What was different this time, say those who testified in the trade representative hearings, was that the tariffs presented an economic challenge to all, whether California producers, small retailers in the middle of the country, or the biggest national companies in every tier. Higher prices for imported wine would lead to job losses, bankruptcies, and lost sales up and down the supply chain.
"We don't always keep in touch all of the time," says Stuart. "But we saw that it was important that everyone come together. Maybe some of the bigger organizations took the lead, but everyone saw the need." In this, it wasn't just the wine business, he added, but the National Restaurant Association, which represents 380,000 US restaurant locations, as well as several distillers trade groups. The former saw that tariff-induced price hikes would cut wine and spirits sales, while the latter was facing a tariff on a variety of whiskeys.
Says Frank: "When this first came out, I think a lot of smaller people just assumed the big companies would handle it. But they saw that they could help, as well."
Jeff Siegel
