US 25% tariff on European wines; 100% "digital" tariff on French products called off for the moment

[Marcu_Stanley]

Damn, what a bizarre incentive structure. Big subsidy to overextracted left bank Bordeaux and Burgundy. Does anyone have Trump Administration connections that can change it to a 25% tariff on wines over 14%? Much better public policy justification!

[David_Bu3ker]

Just remember that over 14% wine already has a higher tax structure, so labeling wines as over 14% does not mitigate the whole cost of the tariffs.

[Kevin_Gibbs]

On your assumptions, the price would rise 25% to $62.50.

But basic economics will tell you that the sellers (producers, importers, distributors, retailers) will eat (as it were) part of the increase, because the increase in price will reduce demand and they’ll be better off to retain sales by absorbing some of the loss. It is almost never the case that an increase in costs or taxes is passed through 100%.

The good news is that the euro is down to $1.10 (from a high in the $1.40s in 2011) (oh, that nasty Federal Reserve driving up the dollar!), which mitigates this somewhat.

That isn’t correct. The tariffs are calculated as 25% of the import cost, not the retail sales price.

[Yao_C]

On your assumptions, the price would rise 25% to $62.50.

But basic economics will tell you that the sellers (producers, importers, distributors, retailers) will eat (as it were) part of the increase, because the increase in price will reduce demand and they’ll be better off to retain sales by absorbing some of the loss. It is almost never the case that an increase in costs or taxes is passed through 100%.

The good news is that the euro is down to $1.10 (from a high in the $1.40s in 2011) (oh, that nasty Federal Reserve driving up the dollar!), which mitigates this somewhat.

That isn’t correct. The tariffs are calculated as 25% of the import cost, not the retail sales price.

You’re both right. Yes it’s true that tariffs affect wholesale cost, not retail sales price. But in addition, to John’s point, there is almost certainly some demand elasticity, which means that a rational supply chain will not pass on 100% of the cost increase

[Robert_M_yers]

Deleted for bad math…

[J_Rock]

So what is the practical increase on the end-cost to consumers? If a bottle is $50 on the shelf now, and holding all other variables equal (exchange rate, markup, etc.), the next vintage is subject to the tariff, what will next year’s shelf price be?

I think the consumer and suppliers will share the burden of the increased cost; however, who takes on what share of such cost will depend on demand elasticity. I imagine the suppliers will bear more of the increased cost in connection cheaper, value wines (or potentially stop selling some of them, depending on their margin), while the consumers will probably bear more of the increased cost in connection to more premium wines.

[Rauno_E_NZ]

Hopefully this lowers demand from the USA for a bunch of wines I want, making it easier for me ! I sympathise with you guys in the US though, at least those of you who didn’t bring this on yourselves.

[Tom_G_l_a_s_g_o_w]

But Airbus has been directly subsidized for many years. I always wondered why the US just ignored that. And China is and has done the same - directly pump state money into enterprises so that they could compete with other countries.

More importantly though, tariffs have never been shown to work well long term - Jefferson found that out, and American Airlines, JetBlue, Frontier, and others are flying Airbus planes. So why tariff cheese instead of those planes?

The EU has argued for years (I think for two decades or so) that Boeing benefits from subsidies because its defense aircraft contracts help underwrite development of civilian aircraft. So it wasn’t as simple as “they subsidize, we don’t.” And I believe that the EU governments have curtailed their subsidies to Airbus over the last 15 years or so, as the company grew bigger and more solid. Since Airbus was formed with government support so a European company could compete with the likes of Boeing and Lockheed, it was hard for the British, French, German and Spanish governments not to keep supporting it.

Apparently, the ruling on Airbus came first and the Boeing ruling will be later. The US and EU couldn’t come to an agreement on subsidies to aerospace. No surprise in this environment.

[Robert.A.Jr]

It says wine not over 14%. Will we be seeing alot of 14.1% alcohol wine?

More business for Rolland.

Stop baiting me, Howard!

[David_Bu3ker]

On your assumptions, the price would rise 25% to $62.50.

But basic economics will tell you that the sellers (producers, importers, distributors, retailers) will eat (as it were) part of the increase, because the increase in price will reduce demand and they’ll be better off to retain sales by absorbing some of the loss. It is almost never the case that an increase in costs or taxes is passed through 100%.

The good news is that the euro is down to $1.10 (from a high in the $1.40s in 2011) (oh, that nasty Federal Reserve driving up the dollar!), which mitigates this somewhat.

That isn’t correct. The tariffs are calculated as 25% of the import cost, not the retail sales price.

Yay. Somebody gets it!

[Ian_S]

Guess my wife and I can wave bye-bye to Mosel Riesling for a while.

[Tom_G_l_a_s_g_o_w]

But Airbus has been directly subsidized for many years. I always wondered why the US just ignored that. And China is and has done the same - directly pump state money into enterprises so that they could compete with other countries.

More importantly though, tariffs have never been shown to work well long term - Jefferson found that out, and American Airlines, JetBlue, Frontier, and others are flying Airbus planes. So why tariff cheese instead of those planes?

The EU has argued for years (I think for two decades or so) that Boeing benefits from subsidies because its defense aircraft contracts help underwrite development of civilian aircraft. So it wasn’t as simple as “they subsidize, we don’t.” And I believe that the EU governments have curtailed their subsidies to Airbus over the last 15 years or so, as the company grew bigger and more solid. Since Airbus was formed with government support so a European company could compete with the likes of Boeing and Lockheed, it was hard for the British, French, German and Spanish governments not to keep supporting it.

Apparently, the ruling on Airbus came first and the Boeing ruling will be later. The US and EU couldn’t come to an agreement on subsidies to aerospace. No surprise in this environment.

Edit the above was mentioned earlier.

The EU objects to Boeing/Lockheed tax incentives as well.

[Robert.A.Jr]

Phuck. I have to go back to Ovid?

[John_Morris]

On your assumptions, the price would rise 25% to $62.50.

But basic economics will tell you that the sellers (producers, importers, distributors, retailers) will eat (as it were) part of the increase, because the increase in price will reduce demand and they’ll be better off to retain sales by absorbing some of the loss. It is almost never the case that an increase in costs or taxes is passed through 100%.

The good news is that the euro is down to $1.10 (from a high in the $1.40s in 2011) (oh, that nasty Federal Reserve driving up the dollar!), which mitigates this somewhat.

That isn’t correct. The tariffs are calculated as 25% of the import cost, not the retail sales price.

Did you read what I was responding to? It was:

So what is the practical increase on the end-cost to consumers? If a bottle is $50 on the shelf now, and holding all other variables equal (exchange rate, markup, etc.), the next vintage is subject to the tariff, what will next year’s shelf price be?

If the mark-up stays the same in percentage terms, the middlemen will take their cut based on a post-tariff price and that cut will be 25% larger in dollar terms. That will get you to $62.50, before factoring elasticity etc.

[John_Morris]

Phuck. I have to go back to Ovid?

There’s a rumor going round about an extra surcharge on stinky green French cab franc.

[Robert.A.Jr]

Phuck. I have to go back to Ovid?

There’s a rumor going round about an extra surcharge on stinky green French cab franc.

If the tariff applies to foie gras, I’m voting for Bernie!

[NED_VALOIS]

I don’t think you will have a chance to do so.

[John_Morris]

Phuck. I have to go back to Ovid?

There’s a rumor going round about an extra surcharge on stinky green French cab franc.

If the tariff applies to foie gras, I’m voting for Bernie!

I heard he plans to tax it out of existence.

[Robert.A.Jr]

There’s a rumor going round about an extra surcharge on stinky green French cab franc.

If the tariff applies to foie gras, I’m voting for Bernie!

I heard he plans to tax it out of existence.

Now that he is all stented up, perhaps true.

[Rory_K]

I managed to get a whole suitcase full of Rioja, Sherry, and little cans of foi gras out of Madrid two weeks ago and customs waved us all through, now I wish I’d done two suitcases!