“It’s crunch time to get people aware of what this means for our industry, our future, our city,” says Harry Root.
Root, the co-founder of Charleston distributor Grassroots Wine, a handful of other wine importers and distributors, and select congressmen from around the country have started a website and petition, Save American Wine Jobs, in response to proposed 100 percent tariffs that could go into effect as soon as mid-January. “My concern is, I think there is a lack of understanding about how tariffs will hurt the U.S. economy,” says Root.
Stop and stay
The proposed tariffs will affect a wide range of goods including everything from dairy products to olives and mussels. (You can find a full list at the terrifyingly named Regulations.gov.) Root, you might suspect, is most concerned about the wine, with the potential for tariffs to be imposed on all Old World varietals.
The strategy Root and co have developed is a “stop and stay” or “stop and study” plan. The two-point plan involves conscripting both citizens and legislators to write to U.S. Trade Rep. Robert Lighthizer, the “sole decider” on whether the tariffs will go through. The plan asks that the tariffs be put on hold until there can be a hearing with the House Ways and Means Trade subcommittee to study potential economic effects. Congress reconvenes on Jan. 7, and public comments on the matter will be taken until Jan. 13.
The tariffs stem from a 15-year dispute between the European Union and the U.S. over their respective airplane manufacturers, Airbus and Boeing. Each claims that the other’s manufacturer has been unfairly subsidized. The U.S first filed a case with the World Trade Organization (WTO) in 2006 claiming that Airbus had received $22 billion in illegal subsidies. Responding, the EU pointed the finger at the U.S., claiming that Boeing received $23 billion in “trade-distorting subsidies.”
Since then, the WTO has ruled that both unfairly subsidized the manufacturers, handing America and the EU each a claim on victory. The WTO has allowed the U.S. to impose tariffs on up to “$7.5 billion worth of EU goods,” a figure based on the estimated financial value of EU subsidies to Airbus. Predictably, if these proposed 100 percent tariffs from the U.S. go through, the EU is ready to implement $20 billion worth of their own countermeasures covering items from American aircraft to ketchup.
Save American Wine has enlisted two members of Congress to sign on to their plan: U.S. Rep. Joe Cunningham, a Democrat from Charleston, and U.S. Rep. William Timmons, a Republican from the Upstate.
“The European Union has been illegally subsidizing Airbus for the last 15 years,” Timmons said in a statement to Charleston City Paper. “That said, I am not convinced that tariffs on unrelated items, like wine and other agricultural products, are the way to go. … The U.S. must hold Europe accountable for its continued violations of trade rules, but I hope we reconsider our current approach.”
Root notes that this issue is bipartisan, especially in a city like Charleston. “The analogy I like to use is: servers are in the wine business,” says Root. “If you’re a server, 40 percent of what you sell is beverage. If you’re working at a restaurant, half of the beverages you sell are imported. It’s 100 percent tax on half of what you sell — that is a big deal. It’s going to increase the cost of going out, reduce the paycheck, divide paychecks of anyone in wine.”
In a statement, Cunningham reiterated that the tariffs could have an impact on the local hospitality industry.
“Tourism and the hospitality industry are vital economic drivers in the Lowcountry and throughout our state. While tariffs can be an important method of protecting American trade abroad, we must ensure they do not come at the cost of American jobs and small businesses here at home. The administration should not implement these tariffs until we have a clear view of how they’ll impact our economy.”
“Not only is it a terrible thing, it’s the worst time of year,” says Edmund’s Oast wine director/Edmund’s Oast Exchange manager Sarah O’Kelley. O’Kelley says she didn’t quite realize the magnitude of the tariffs at first, “I was brushing my teeth at 6 a.m. and opened my email and thought, ‘This is crazy, there is no way!’ During the holidays, everyone is distracted, we’re all just surviving.”
It was back in October when the first round of tariffs, at a more-palatable 25 percent, were imposed on products including still wines under 14 percent from Spain, the United Kingdom, France, and Germany. Root says they absorbed that initial cost, hoping it wouldn’t increase more or last too long. And it was only four countries, not all of Europe. “At least it wasn’t Italy,” O’Kelley thought at the time. But now it’s Italy, too.
Racks of Old World wines line the upper floor of The Exchange; O’Kelley estimates over half their inventory comes from across the pond. “This is going to affect small American businesses, small distributors, it won’t be places like Total Wine,” says O’Kelley.
Root says he fully understands why tariffs are imposed — “The reason you have tariffs in the first place is to increase negotiating power over disputes you’re having or ones you’ll have in the future” — he just isn’t sure why American businesses have to suffer.
The question remains, who will be more negatively affected — the European producers or the American importers? Root and the Save American Wine group say it’s the latter: “The consensus among those in the wine business is quite the opposite. This will cost many thousands of American jobs, put many hundreds of American businesses in jeopardy, and have very little effect on the Europeans. The U.S. represents only about 15 percent of wine exports from the EU.”
In addition to potential loss of wine jobs, O’Kelley urges that the moves could alter the integrity of the American wine industry. “Old World wines are the foundation for their New World counterparts,” she recently wrote on her blog Grape to Table. “These wines are the standard bearers even for those winemakers going off in less traditional directions.”
Any wine drinker can tell you: Wine is intrinsically tied to place. You cannot replicate terroir — that Lombardy you lust for cannot be recreated in the U.S — but could domestic wine companies benefit from a focus on homegrown vino?
A silver lining?
Rick Rubel, the veteran Charleston Grill sommelier, says if this tariff had been imposed 20 years ago, “It would be very difficult” to curate a solid wine list. He also says he probably has more Old World than New World available in house and that he hopes the tariffs aren’t enacted — it would hurt a lot of his friends in the industry. But he says he isn’t too concerned about how it will affect those working in the hospitality field.
“We are just going to pass along the cost,” says Rubel. “Customers are going to pay it, or they will switch to something else.”
While you cannot precisely replicate those familiar flavors, you can train your palate — oenophiles who swear by Sancerre probably aren’t going to switch to mass-produced light beer. They’ll adapt. Plus, the East Coast is where the Old World affinity abides, Rubel says. The West Coast has been dominated by high-quality wines grown from American soil in Washington, Oregon, and California for years. “I can easily make a great wine list without European wines,” Rubel says. “Not that I want to,” he adds.
Counter Cheese Caves co-owner Eric Casella only works with American cheesemakers. Casella has mixed feelings about the 100 percent tariffs affecting a wide range of European chevre specifically. “It’s tough to say, initially it could help some of the bigger cheesemakers in the U.S.,” says Casella. “I think a lot of it comes down to the reputation of cheeses — things like Parm, there’s not really a replacement for that.”
If the tariffs do go through, Casella hopes that his small cheesemakers can keep up with demand. “They’re so small, if they win a cheese award, their U.S. stock gets depleted.” And like wine, some cheeses require extended time investments. But, Casella thinks this could also draw more attention to American cheeses. Counter Cheese Caves, based in North Charleston, is primarily wholesale, and Casella says they won’t raise their prices unless their cheesemakers do. “People balk at the price of cheese, everyone is trying to keep it as low as possible,” he says.
Casella says in the best-case scenario, the tariffs will “level the playing field a little bit for American cheesemakers and hopefully shine a light on the smaller guys.”
Worst-case scenario? Well, job losses for one. O’Kelley also worries that American wine will suffer without the competition, citing the South African wine industry during Apartheid. “They call it cellar palate, if you’re only tasting your own wine, you have nothing to reference.”
At the end of the day, costs from the tariffs could just get stacked on top of normal market forces of supply and demand.
“There’s not enough diversity or enough [American] wine to satisfy,” Root believes. “The price will go up.”