Will Pragmatism trump over politics.
US Tariffs Shake Up Global Trade: What It Means for Wine and Beyond
As an individual, I’m watching this with glee—the end of globalism live. As someone who was brought up in the UK under Thatcher and watched globalization completely decimate industry, wealth, and communities, plunging masses of people outside of the Home Counties into mass poverty, I’m absolutely loving this.
We don’t need a world in which we issue debt to buy things we don’t need. Yes, if you’re a winemaker and whining about being unable to sell wine to the US—well, tough luck , your carbon foot print is going down and there are plenty of good winemakers in the US.
Sell local, buy local, and support your local businesses no matter what service they provide or goods they sell. Forget the supermarkets, forget the big brands, and get to work , these guys are feeding families not buying Yachts..
The United States has announced new tariffs that will impact key global trade partners, with Switzerland facing a 30% tax, the EU at 20%, and the UK at 10%. While these figures may seem steep, they are considerably less severe than the 200% alcohol tax that was initially proposed in retaliation to the EU’s 50% tariffs on American whiskey and bourbon.
Understanding the Tariff Formula
The calculation behind these tariffs follows a reciprocal trade formula:
(Trade Surplus with the US ÷ Total Exports to the US) ÷ 2 = Reciprocal Tariff Rate
While this approach attempts to balance trade relationships, its effects on industries—particularly wine producers and importers—are already sparking concerns.
Possible Impact on the Wine Industry
Many within the wine sector are bemoaning the tariffs and their potential to disrupt trade flows and increase costs. However, compared to the dreaded 200% levy, this outcome is far less damaging.
The expected tax burden will likely be distributed along the supply chain:
8% absorbed by winemakers or producers
8% passed on to importers
8% absorbed by retailers ( the mark up on EU wine in the US by restaurants and bars is ludicrous ) , this is a drop in the Ocean.
This would create a total 24% price increase, with a 4% cushion to account for potential increases in sales tax.
Tensions Between the US and the EU
The geopolitical implications of these tariffs are just as concerning as their economic impact. Former US President Donald Trump has repeatedly criticized the EU, claiming it was designed to compete unfairly with the United States.
In response, the European Commission has issued a warning:
"Unless constructive negotiations take place, the EU will retaliate."
This could potentially lead to 200% tariffs on European wine, a scenario both producers and consumers are eager to avoid—except, of course, for American wine producers, who stand to benefit.
France Responds
French President Emmanuel Macron has called an emergency meeting at the Élysée Palace on Thursday at 4 p.m. with representatives from industries affected by the US tariffs. The French government has made it clear that they are preparing countermeasures.
Meanwhile, European Commission President Ursula von der Leyen reinforced the EU’s position:
"President Trump’s announcement is a major blow to the world economy. We’re preparing for further countermeasures to protect our interests and businesses if negotiations fail." let’s hope not..
German Responds
German Economy Minister Robert Habeck: “Donald Trump will buckle under pressure from Germany and Europe in an escalating trade war”. ( this is not looking good ).
German Chancellor Scholz: “Even if we did nothing in response, the tariffs will cause problems for the U.S. economy. It would be a serious economic error”.
Pretty big gamble - the problem the EU now has is it negotiating on behalf of the German Car industry , the fall out will end up on the small farmers and winemakers , they will take the hit for this decadence and the whole block.
Who is Most Affected?
The 30% tax on Swiss goods will hit the growing natural wine market, particularly in New York, Philadelphia, and Washington, D.C., where Swiss wines have been gaining popularity over the last year..
The 10% tax on the UK, however, will have minimal impact, as the UK’s produces fuck all , automotive, aerospace, and defense industries—sectors where much of the production has already shifted to the US. Even Rolls-Royce has opened a new factory stateside.
With tensions rising, all eyes are on the EU’s next move. The question remains: Will diplomacy prevail, or will economic egoism escalate into a full-blown trade war?
For now, the wine industry—and global trade at large—can only hope that pragmatism wins over politics.
