Official Statement about Pending Tariffs on European Wine and Food
To our Friends, Colleagues, Partners, and all those in the Industry,
Cutting Edge Selections submits to you the following call to action regarding the potential upcoming tariffs to be levied on a number of products from the European Union:
As many of you may have heard, beginning October 18th certain wines from France, Spain, Germany, and the United Kingdom will be subject to a 25% tariff, an increase of almost 23% over the current rate. The new tariffs will also include items like cheese, olive oil, cured meats, and liquor from certain countries within the EU.
Time is running out to prevent this from happening, and we must band together and act now! Contact your elected officials and the US Trade offices today!
With this call to action, our hope is to inspire those within the hospitality, retail, import, and distribution industries to speak up and quickly help prevent what could create very real issues for all of us in the very near future.
Many of you will ask why these tariffs are being levied. While it’s a complicated question the basic answer is that the World Trade Organization has granted the US the right to impose $7.5 billion in tariffs against the EU related to a 15 year legal battle that found illegal and unfair subsidies given by various EU countries to Airbus.
Why small European farmers are the focus of this is unclear, as anyone can tell you that wine and cheese have nothing to do with the aviation industry. It’s worth noting that while most agricultural and alcoholic products are subject to a 25% increase, the increase on aircraft is only 10% and many aircraft parts are excluded from the tariffs all together. Many insiders believe these tariffs are an attempt to get the EU to drop its charges that the US Government gave Boeing similarly unfair subsidies and tax advantages as found in the case against Airbus (a case which is set to be decided by the WTO early next year). Recent articles have even suggested that the $7.5 billion ruling was meant to create room for negotiation, not to have these types of tariffs levied on un-related industries.
The effects of the new tariffs are still unknown. Certainly prices will increase. The European farmers and producers won’t shoulder the burden alone.
As an importer and distributor a part of the new taxes will fall to us. It will fall on our import partners. It will fall on some level to restaurants and retailers across the country, ultimately it will fall on the American consumer.
As anybody who has ever worked in the hospitality industry can tell you, every link in the chain works on slim margins with a few percentage points often being the difference between growth and failure. Even with the rest of the supply chain taking a hit of a yet to be determined size, prices will still increase by an estimated 10-20% on the goods subject to the new tariffs.
This won’t necessarily cripple our industry, but its effects will be felt across the board. For CES, we estimate about 20% of our portfolio will be subject to the increases and any lost sales or margins will hurt. With the rising costs of healthcare, wages, and shipping, margins in our industry are already getting smaller. This is especially true for smaller to midsize companies who rely on certain margins to stay afloat. Without question these tariffs will affect the smallest among us more than the largest, but those involved of all sizes and at all levels will be faced with very difficult decisions.
It also doesn’t stop at just the industries we are referencing. If you enjoy dining out or cooking at home, be prepared to spend a little more. Beyond wine and cheese, many other imported food items like yogurt, seafood, cured meats, butter and olive oil are all going to be affected. If you work in the retail industry, be prepared to be charging a little more for many of the products you have long supported. If you work in hospitality, be prepared to be faced with difficult decisions and fewer choices about the products you sell and the ingredients you use.
Since the official announcement of the tariffs last week, we have been working tirelessly with trade organizations, our customs brokers, and our suppliers and shipping companies to figure out how to best handle this issue. Over that period of time, the new tariffs went from headline news in the US for a day to an afterthought. No one is talking about this in the press or on social media. It’s possible this is because none of us think this is all that important. We feel that to believe that is naïve at best.
According to the US Department of Labor Statistics, over 10% of our country is employed in the hospitality industry. That means there are over 16 million people who may be affected by this tariff. That is not a small issue. That doesn’t include the millions more employed in wine and retail, the distribution, import, trucking, and logistics industries that will also be affected. It is also worth noting that of all small retail businesses in the US, Wine and Spirits is the second most common.
In short, these wide ranging effects mean that even a small contraction in our businesses can have a very real affect on our lives and the domestic and global economy.
We are not saying that restaurants, retailers, and distributors are going to start closing down overnight. Some in the industry will be hurt more than others. Some will close, and many more will be forced to adapt in order to survive. Jobs will likely be lost at all levels.
This issue should be forefront in all our minds, on our social media accounts, and in the press for the next 9 days. This is a call to all of you in the industry who will be affected. This is a call to everyone who has worked in the hospitality or retail industry at some point, who took valuable life and career lessons and shared countless memorable experiences. This is a call to an industry that has always stood up for itself, worked toward a goal of providing amazing experiences and who care about their craft and desire to provide the best products and ingredients at fair prices. This is about our ability to be successful, creative, and push our industry forward by protecting ourselves and our future.
We urge you to reach out to your elected officials, to let them know how YOU will be affected. As an industry, we need to band together and tell our politicians to go back to the negotiating table before this is enacted on the 18th. They need to be made aware of the potential damage these tariffs can do and the struggles that they will undoubtedly create.
We urge you to share your concerns publicly; to make others understand the potential ramifications of unfairly punishing such an important sector of our workforce and economy. This isn’t just about a few small producers in Europe. This isn’t about a handful of French, Spanish, and German wine importers. This is about all of us. This is about standing up against unjust treatment and unfair trade practices designed to punish those who have done nothing wrong.
While contacting your elected officials, trade organizations, and our own federal trade negotiators may seem political, we don’t view this as simply a political issue. As a company, Cutting Edge has no political affiliation and employs a diverse team of people with varying beliefs. We view this as an economic issue, as a social issue, and in some ways as a moral issue. It is unfair to punish businesses, both foreign and domestic, for the flawed and illegal practices of an unrelated industry. The hospitality and retail industries in the United States and the agricultural industry in Europe have done nothing wrong and should not be unfairly subjected to these tariffs.
We believe that together we can stop this from happening, that we can force our trade negotiators back to the table, and that we can make those around us understand the realities and importance of the situation by coming together with all of you and speaking in a loud, unified voice. Let us make it happen now, before the dangerous affects of this unjust and harmful tariffs take hold. The WTO is calling for negotiations to be re-opened on October 14th. Let’s rally together to let our trade representatives, elected officials, and the general public know where we stand!
Time is running out, and the time to act is now!
We are in this together, and together we can beat it back.
THE BEST WAY TO CONTACT YOUR ELECTED OFFICIALS IS THROUGH THEIR OFFICES VIA PHONE OR EMAIL. A LIST OF CONTACT INFORMATION AND OFFICES CAN BE FOUND AT:
https://www.senate.gov/general/contact_information/senators_cfm.cfm
https://www.house.gov/representatives/find-your-representative
*Most Senators and Members of the US House of Representatives have a dedicated trade and commerce specialist on their staff. This would be a great person to speak to! Also, keep in mind Ohio Senator Rob Portman is the former US Trade Representative
To Contact the US TRADE REPRESENTATIVES OFFICE, YOU CAN CALL THE EUROPEAN TRADE OFFICE AT 202-395-3320, THE CHIEF AGRICULTURAL NEGOTIATOR AT 202-395-9654, OR YOU CAN EMAIL CONTACTUSTR@USTR.EOP.GOV