New wine, cheese tariffs worry small business owners
A new round of tariffs took effect on Friday, but they have nothing to do with China or North Korea.
These duties imposed by the United States are on products that many Americans enjoy.
The Trump administration imposed duties on wine, liquor and cheese from Europe and they couldn't come at a worse time for small retailers, given the approaching holiday season when many make their money for the entire year.
In a statement, the International Beverage Alcohol Associations said it remained united in its opposition of tariffs.
"Our industries are collateral damage in trade disputes that have nothing to do with the beverage alcohol sector. This new round of tariffs will further damage a transatlantic industry that has already been negatively impacted by the EU’s retaliatory tariff on American Whiskey," the statement reads.
"This open access to each other’s markets has significantly benefitted EU and U.S. distillers, vintners, farmers, and the hospitality industry on both sides of the Atlantic, resulting in increased jobs, community investment and consumer choice."
No one expects consumers to completely abandon Bordeaux and other wines from France, Scotch whisky or cheeses like Parmesan or Roquefort when the 25 percent tariffs take effect Friday.
Wine retailers, distributors and importers already expect some customers to seek reds and whites from countries whose products aren't being taxed. And any signs that customers are balking at higher prices will force retailers to absorb their increased costs.
The tariffs, mostly on food and alcoholic beverage products, are also being imposed on equipment from kitchen knives to large aircraft in retaliation for the European Union's subsidies of planemaker Airbus, which competes with Boeing.
The tariffs will be slapped on goods that arrive in the U.S. from Friday onward. One bit of good news is that much of the food and beverages to be sold during the holiday season are now in the country and headed to store shelves, so retailers generally won't have to come up with extra cash until later.
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It is the long-term impact of the tariffs that are a concern.
Retailers are hoping for trade talks between the U.S. and EU and that the Trump administration will withdraw the tariffs. Price-sensitive customers are aware they have many other choices when it comes to purchases like wine and cheese, so owners may need to change the products that they stock.
... these new U.S. tariffs on EU spirits and wines could result in the loss of 8,000 good-paying jobs across the U.S. beverage alcohol sector, from importers, distributors, wholesalers, to the hospitality sector.
Shoppers may opt for buy wine from a country like South Africa or Chile whose products are not subject to tariffs, or they may switch from a single-malt Scotch to a cheaper blend or domestically made bourbon. Instead of Stilton, they may choose an artisanal cheese from Vermont.
Perhaps a bigger concern is what will happen after the holidays. People in the wine business are concerned that if the tariffs are still in effect, sales of popular French rose wines will fall next summer. Those wines are scheduled to be shipped to the U.S. early in 2020.
Retailers have less pricing leeway in states where alcoholic beverage control agencies regulate wine, liquor and beer prices and the timing of price increases.
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The Associated Press contributed to this article.