The list reads like something that could go under the header of “things that are delicious.” French, Spanish and German wine. Spanish olives. Parmesan. Stilton. Currant jelly.
Their inclusion on the list, though, means that the price of that bottle of Cotes du Rhone you like to pick up at the grocery store or the cheese plate at your neighborhood bistro could go up. But price hikes on the foods covered by the new tariffs are only part of the story: Ripple effects could mean higher prices on other items at stores or in restaurants, as people up and down the food chain make up for the new costs, experts say.
The vagaries of the marketplace mean the tariff increases won’t result in a uniform price bump. All of which this week sent wine and food buyers, distributors and restaurateurs into a fog of uncertainty that’s thicker than a creamy Greek yogurt (which is also on the list).
After markups, retail prices for wine could go up as much as 40 percent on the shelves, predicts Guillaume Touton, who owns New York-based wine importer Monsieur Touton Selection. Touton says French wines made up almost half of the wine he sold last year, but he’s prepared to start looking at wines from other countries if people aren’t willing to pay higher prices.
“I have 220 salespeople, and I have to feed them and find them something to sell,” he says. “If the customer does not follow the price, then I will buy more from Chile, or Argentina, or New Zealand.”
For someone like Sebastian Zutant, co-owner and resident wine guy at Primrose in Washington’s Brookland neighborhood, the choices aren’t as vast. His bistro almost exclusively offers French varietals, many obscure, and often at really good prices, which means he operates on margins with little room to absorb price hikes. He joked this week with his colleagues about changing the restaurant’s concept to an all-American one. “I could call it Dump Trump Wines,” he said. But he said he isn’t sure yet how he’ll actually deal with the changes. “We’ll figure out a way.”
Tom Wark, executive director of the National Association of Wine Retailers, says, “Everybody gets to share the pain.” That includes consumers, who will see price increases, and retailers, whose sales are likely to go down as a result. Tariffs might be intended to pressure or punish trading partners, but Wark says they will take a toll closer to home. “My members have told us that there is no doubt tariffs will hurt them because it will hurt their sales.”
Otherwise, there was little certainty to be found. “We are just in the process of working out the consequences,” said one exporter of French wines. “It’s very, very complicated.”
Fabio Trabocchi, whose Washington-based restaurant group owns five Italian restaurants and a Spanish one, says he has not yet heard from his purveyors what the new tariffs will mean. “It’s a waiting game,” he says. “We don’t have a plan, and there might have to be a period of adjustment — we just don’t know.”
Even if your favorite beverage or food wasn’t targeted, its price could still go up.
Dean Gold, a retired D.C. restaurant owner and former buyer for grocery giant Whole Foods, says large importers can shift the costs of the new tariffs around. If a company decides, for example, that it doesn’t want to kill demand for Scotch (also among the items set for an increase), it can keep its whisky prices the same and make up the cost elsewhere. “They might offset it by raising prices of Japanese whiskey or a U.S. product, or something else from a non-tariffed country to manage the overall balance of their portfolios,” says Gold, who also trained as an economist.
Big buyers with enough leverage can also negotiate lower prices with providers, experts say. “If you have market power, you can go to your supplier and see if you can get them to eat part of it,” says Bill Reinsch, who holds the Scholl Chair in International Business at the Center for Strategic and International Studies. “If you’re Walmart, you can say, ‘If you want me to keep buying these large quantities, you’re going to have to lower your prices to help make up for it.’ ”
Part of the uncertainty swirling around the world of imported food and beverage has to do with how long the new tariffs will stay in place. Reinsch says many observers expect the United States and E.U. eventually will negotiate on them, with Europe awaiting a World Trade Organization decision next year in a separate airline dispute that could mean it is permitted to levy tariffs on U.S. goods.
But such talks could take time — and there is historical precedent for food-related tariffs that started out as salvos in a trade war but ultimately became permanent fixtures. Just look at the “Chicken War” of the 1960s, which started when France and West Germany slapped a tariff on cheap American poultry. The United States responded by levying a similar tariff on products from those countries, including the popular French tipple brandy (also on trucks, in a bid to hurt German imports).
The matter was never resolved, and the dueling tariffs remain to this day, offering a cautionary tale for anyone waiting for the current food fight to abate. “You cannot say for certain this will go away,” Reinsch says. “It could become the new normal.”
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