“If people want to just arbitrarily put taxes on our digital companies,” said Treasury Secretary Steven Mnuchin earlier this week in Davos, Switzerland, “we will consider arbitrarily putting taxes on car companies.”
The quote comes via a Washington Post opinion piece published today, “Trump’s Treasury secretary just admitted the tariff rationale is hogwash.”
Even though there seems to have been a deescalation in the European Union-U.S. trade war (at least temporarily according to tweet, below, by French president Macro; see this Bloomberg report “Macron, Trump May Have Tariff Truce in 2020 Digital Tax Spat”), the threat of 100 percent “arbitrary” tariffs on EU wines and food products still looms broadly over the U.S. wine industry. Despite the semblance of a rapprochement between the two countries, there is no guarantee that the frequently unpredictable Trump administration won’t impose such severe and debilitating duties.
Excellente discussion avec @realDonaldTrump sur la fiscalité du numérique. Nous allons travailler ensemble sur un bon accord pour éviter toute escalade des tarifs.
— Emmanuel Macron (@EmmanuelMacron) January 20, 2020
The acute pungency of Mnuchin’s words sting this morning as I recall my conversation with a wine bar owner in Tulsa, Oklahoma yesterday via telephone. As for so many of my colleagues and peers in the wine trade, the uncertainty caused by the “arbitrary” nature of the trade dispute continues to send ripples of disruption through our industry.
Working in an emerging market like theirs, where progressive wine tastes and trends are just beginning to take shape, they depend on small-scale importers and distributors for the by-the-glass allocations that keep their business model humming. And suppliers like those are on hold: fearful that excessive duties could still be imposed, they are not placing their normal January orders and they are less inclined to share their highly allocated wines in markets like Tulsa, opting instead to focus on top markets where the wines will be more lucrative both in terms of volume and wholesale prices.
His troubles were echoed in an email from a New York-based freelance marketing consultant (whose business parallels mine).
“This tariff things is a real [expletive] pain in the ass,” they wrote. “I can barely get anyone to respond relative to my consulting projects. ugh.”
There may be light at the end of the tunnel in the tariff wars. But the Trump administration’s “arbitrary” strategy continues to sow confusion. And the lack of certainty continues to impact a large swath of the U.S. wine trade at a delicate time of the year when deals are made and wines are allocated. The long-term implications could be disastrous, especially for trade members like my colleagues above — and people like me.