What does a 200% tariff mean to consumers and the whole alcohol industry in New York?

FLORA WARSHAW, HOST:

Earlier this month, President Trump announced new tariffs on imports of foreign alcohol products. He said if the European Union doesn't drop its planned fifty percent tariff on whiskey, the U.S. will counter with a two hundred percent tariff on European wines, champagne, and other alcoholic beverages. Zhuoya Ma reports on what these tariffs could mean for consumers and the beverage industry in New York.

MA: May Matta-Aliah is a wine industry consultant and educator. She says wine enters the U.S. market through the “three-tier system,” involving importers, wholesalers, and restaurants or retailers. With the margins added in each step, all of these factors would be strongly impacted by the new tariffs. 

ALIAH: “With this new round, when we're talking about 200%, not 25%, that could effectively just completely demolish the industry. You know, I mean, the wine industry has is already going through a difficult time.”

MA: Chris Conlon is an associate Professor of Economics at New York University and studies how firms compete and set prices. He says one issue with tariffs is they are reciprocal, that you rarely get to enact your tariff without other countries responding by enacting theirs.

CONLON: “And in that case, we just end up in a much worse place than where we started, because you enact tariffs on me and I enact tariffs on you. And now we're kind of just selling less stuff at higher prices. And there are no winners in that world, at least not, you know, in the aggregate.

MA: Conlon says that if 200% tariffs are imposed on wines and other alcohol, consumers could see a broad shift in the kinds of products that are available. 

CONLON: “Both for the imported products, but also for the domestic products.

I think you're going to see prices go up quite a bit if we basically take European competition a third of the market out. You know, it's pretty rare we get to take a third of the market out. You know, we lost less than a third of the egg market, you know, in the last six months.

And we saw what happened to egg prices.

MA: Yannick Benjamin is co-owner of “Beaupierre Wines&Spirits” in Hell’s Kitchen, he also runs a non-profit organization, “Wine on Wheels,” that supports people with disabilities. He says the new tariffs will impact all levels of the wine and alcohol business in New York City. 

BENJAMIN: “The people and others that are going to really kind of feel the pain is the smaller businesses, smaller wine stores, smaller importers, distributors, smaller restaurants. I mean,  you have to really understand the numbers behind it.

MA: One result could be that the wine market would shrink and along with it the variety of wines available to consumers.

BENJAMIN: “It won't be as unique, each wine store, each restaurant. It'll all sort of have the same kind of wines. I just think that a lot of these businesses already working on thin margins and tariffs, it's just going to be the tipping point.”

MA: For now, the alcohol industry is on hold. At least for the next 6 days. The Trump administration says they will announce the final details–and amounts–of the tariffs on wine and other alcohol products April 2nd, next Wednesday.

Zhuoya Ma, Columbia radio news.