please explain how tax law differentiates between table wine and ??? per below
'But when the Republican tax bill became law in 2018, the line for table wine increased to 16 percent. It’s not clear why the tariffs use the older standard.’
thanks
Why are wines of Portugal and Italy spared the extra tax?
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@Jean
Because Airbus SE is French/German/Spanish owned and has no facilities in Portugal and Italy.
Those tariffs on wine are nothing but retaliation tariffs for informal subsidiaries for Airbus aircrafts. See the third paragraph of this article. Because Italy and Portugal are not affected by the Airbus subsidiary issue there are no extra tariffs on Italian and Portuguese items so there are no extra tariffs on wine either.
When US will be hit by European retaliation tariffs for illegal Boeing subsidiaries in a few months US is going to re-retaliate and then Italy and Portugal might be affected also.
Once again: This is no column about wine this time. This is a war report on a global trade war from the European theatre in substance.
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@Jean
Because Airbus SE is owned by French, German and Spanish but not by Italian and Portuguese companies.
https://en.wikipedia.org/wiki/Airbus
According to this structure Airbus isn´t present in Portugal and Italy.
https://www.airbus.com/company/worldwide-presence.html
As if we didn’t already have enough reasons to drink.
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Look to southern Italy and Portugal. Great wine at bargain prices.
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I can not imagine any French or Italian wine drinkers at any of the Trump rallies
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I just attended the Berlin Bar Convent. Many Bourbon companies were in attendance. Needless to say they are really worried about their exports to Europe. Thanks Trump for single handedly killing AMERICAN bourbon sales in Europe.
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may as well buy wines with a higher alcohol content and drink a little less of them. in the meantime, there are some excellent south african wines, australia and new zealand, as well as washington state and california wines. a hike of $2 a bottle for a light wine won't kill me... but it does annoy me.
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Is no one going to mention that the tariff on French wine was lobbied for by a California Wine Trade group? Since most wines from California come in at over 14% it would make sense why this designation was made.
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Trump has turned the proverbial "swamp" into a shameful, bloody sewer! Going from bad to worse is not the American way to greatness. The consequential stench is severely polluting respected long-held economic relationships across the pond and beyond. This crazy buffoon has got to go, America!
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@Philippe Garmy
The buffoon is ignorant, mean, envious and from what we have experienced, enjoys wreaking havoc, like a wild two year old. I hope he is gone by this time next year. If he isn't, who knows what else will have been lost.
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It is common practice for importers to register all table wines at the 14% and below category, regardless if they creep up above 14% by a few tenths of a point. Many wines vary in alcoholic percentage by as much as 1% from year to year. For instance, a 13.5% alcohol wine can soar to 14.5% in a very warm vintage. Since the alcoholic percentage classification is fixed when each wine is registered with the TTB for a Certificate of Label Approval, the classification will not change for taxation purposes if the wine has a higher alcohol level in any subsequent vintages. My point is, this tax will probably affect all table wines from these countries regardless of their actual alcohol level, as they have most likely been registered at 14% and below.
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I'd like to see an explanation of why you can get a dandy French or Italian wine for $12 --- at least in New Jersey --- but for that same amount, you'd get only a horrid American blueberry wine. Last year we visited wineries in the Finger Lakes and expected to pick up some bargains directly from the producers, but were disappointed that there was never a bottle below $17, most hovering at $20-$25. We were cutting out the distributor, the liquor/wine store and the shipping and we STILL couldn't match in price and quality of European producers. It's the same story everywhere in the U.S. Are we perhaps overtaxing our domestic wineries and undertaxing Europe's?
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There are plenty of cheap US wines, if that’s what you want to drink.
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@CM New Jersey has a very competitive market, but what you're really seeing is the reluctance of smaller producers to sell through "channels." When you sit down and work through the numbers, wine making is not as lucrative a business as pop culture would have it. Per bottle margins are rather slim, so it takes hundreds of thousands of bottles to make significant profit. Consequentially, small producers focus on direct sales through their tasting rooms, wine clubs and direct shipping. Wine club members will get discounts, as will case quantity purchases, of 10% - 20% but the winery really wants to keep as much of the sale as possible. Many of those $12 French and Italian bottles are from producers who make millions of bottles. Guigal's Cotes du Rhone Rouge, $16 here in PA, has a volume of ~4 million bottles per year, and that is just one of Guigal's labels; even the PA LCB lists 9 of their bottles.
As to domestic pricing, the biggest obstacle is the price of good grapes; you need good grapes to make good wine. In 2018, Napa Cabernet Sauvignon grapes were $7,800 a ton. That ton of grapes, after processing by some pretty expensive equipment, will yield about three barrels, which in 3, 4 or 5 years will give you 800 to 900 bottles at best. So optimistically 7,800 / 900 = $8.66 just for the grapes, never mind all the work, bottles, corks, labels etc plus admin and inventory carrying costs, that goes into getting that bottle ready for retail.
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@CM .As a frequent visitor to the Finger Lakes I can say you're not going to get a bargain at the winery as they are not going to undercut the retail shops that sell their wines. What you should be looking for is a tasting to find what you like and some bottles that you won't find at your local retailer.Sometime I find good prices for Riesling at Bottle King in NJ but unfortunately they don't carry any Cabernet Franc.Also check out Empire wine in Albany,NY great selection from Finger Lakes and they ship
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While I despise Trump and his evil, misguided policies, no one should drink low alcohol wine.
Really, this defeats the purpose of the whole exercise.
What next, gluten free pasta? Meatless burgers?
Stop the madness!
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@Mr. XYZ What? A 5 oz glass of wine at 12% is a standard drink. Muscadet, Bordeaux, and Burgundy all are most often under 14%. We should stop drinking Burgundy?
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Hello New Zealand and Australia. Bless the hearts of American producers, but I ain't playing Trump's game
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@ Pete Limon New York
I think that Trump's tariffs on wine and European foods reflect his uncouth boorish tastes that focus on cheeseburgers washed down with moonshine.
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@Tuvw Xyz
My understanding is that our President does not drink alcoholic beverages. He has not explicitly denied drinking Hershey's chocolate flavor syrup. I would not believe him if did.
There was a German chancellor once that didn't drink...
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Trump needs to go. I’d rather do not drink before I buy Zinfandel!
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Time to stock up on French white wines!
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There's a glut of wine here in Washington State and this is good news for our local grape growers and winemakers, at least. They can use some good news since It's been really cold here and I think a lot of the grapes have been hit by frost already and definitely will be tomorrow night if they've escaped so far. It's much earlier than normal for a freeze and I believe that's bad news for the 2019 vintage.
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Excuse my math, but how does a 25% tariff, even if not absorbed by anyone in the chain, translate into a 30% price increase at the retail store?
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@Peter Because if volume decreases, as it surely will, prices will have to go up because everybody along the chain has fixed expenses that will have to be covered by the lesser volume. So he's just estimating where he thinks the new equilibrium price will be with the tariff.
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@roseberry
Additionally, every wholesaler and retailer will take the increased tariff as an opportunity to garner more profit and fold in a price increase.
Wholesalers are a very, very powerful lobby and never miss a beat.
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I’m confused by the article. I rarely see a French, Italian, or Spanish wine with more than 13.5 percent alcohol, and they are often lower (I shop for European wines regularly). Since when is 14 percent considered the midpoint for wines from these countries?
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@John Daniels Good question...I'm in Bordeaux at the moment and naturally the French producers here are rolling their eyes at this tariff. But for them, due to increased sunshine, warmer temps, etc., many of the red wines here have creeped above 14%. 14.5% is the most common level here for the Merlot or Cab Sauv blends. All in all, this is a terrible misguided tariff policy aimed, as others have noted, the wrong industries. French winemakers have nothing to do with Airbus.
If the annual tariff is capped at $7.5 billion is there any estimated on how quickly that will be recovered? Meaning how long will European imports be subject before recouping that amount
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I expect importers will spread the tariff hike around so we should expect all prices to rise
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There's so much so sad here: Small farmers getting hit and hurt; those who appreciate the sincerity, authenticity and taste of lower-alcohol wines - wines that actually belong on the table, drunk with food - getting pinched; and, as Mr. Asimov points out, the intrepid importer who chooses to go to the trouble of ferreting out these wines getting punished for bringing the kinds of beautiful, drinkable wines that made many converts to the elegance of the Old World styles and practices. My own wine education is courtesy of people such as Mr. Headrick, Neal Rosenthal, Kermit Lynch and Terry Theise, importers who brought wines with integrity into the U.S. - wines in the alcohol range of 11% to 13%, for the most part. That the grape farmers they developed relationships with will be shouldering such loss is, as Mr. Headrick states, insanely unfair. We all should be supporting, not stifling, the small farmers and food artisans in this world. Sincerely, Andy Clurfeld
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@Andy
This is "trade wars are so easy to win!" on wine.
You don´t have to read Mr. Krugmans columns to understand what "America First. So let start a trade war!" politics is all about. Just read wine columns. You can´t get a more authentic grass roots trade war reporting than this.
In some months the columnist responsible for soy beans will have to continue. But I fully agree: This stuff doesn´t taste as well as a good cool climate wine...
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It's almost as if... the implications of these tariffs weren't completely understood by the White House. Surely that's not possible?
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@Pete Limon
They definitely have not.
While EU has lost the case "Airbus" against USA the USA has lost the case "Boeing" against EU inreverse only some few months later. The difference is that WTO hasn´t ruled the amount for allowed retaliation tariffs in the slightly later Airbus case yet so it will be in few months when E U is going to strike back by imposing tariffs on American goods on it´s part.
The peculiar irony is that US did not impose on airplanes but on agriculltural goods because they fear a future backlash on grappling Boeing. You might remember the 737 Max-issue. The future European counteroffensive by tariffs on American agricultural goods yet to come as sure as eggs is eggs after decision of WTO on the retaliation amount in the Boeing case seems to be esteemed as more acceptable. This will particularly hit Trump voters.
Cheers!
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