Will Trump's tariffs make the holidays more expensive?

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Will Trump's tariffs make the holidays more expensive?

Did the holidays just get more expensive? New tariffs imposed by the Trump administration target European wine, whiskey and cheese.

What is a tariff?

A tariff is a tax on the goods another country exports to the U.S. You’ve probably heard about them in the news — they’re a tale as old as time, and Trump’s tariffs on Chinese goods back in June sparked fears of a trade war.

So what’s going on with these new tariffs on the EU? This is actually pre-Trump stuff. A World Trade Organization resolution for illegal subsidies given to Airbus, an EU aerospace manufacturer, has been in the works for the past 15 years, and the WTO just gave the Trump Administration the go-ahead to impose penalties on the EU to make up for the illegal subsidies.

The 20-page document detailing the tariffs specifies tax hikes as high as 25% on many things you may be thinking of picking up to enjoy the holidays: wines, cheeses, single-malt whiskeys, olive oils, cured meats and hundreds more, all from different countries in the EU. Shopping for the Ron Swanson in your life? Screwdrivers are on the list too. Aircraft, meanwhile, will be taxed at 10%.

How does this affect holiday shopping?

The rollout of the new tariffs on the EU is being implemented in waves with no official deadline, so it’s still to be seen what the impact will be. Though with a 25% tax on products such as French wine and Spanish cheeses, there’s a chance that when you pick up some Muscadet and manchego for the holiday party, they’re going to cost a little bit more than usual.

How concerned should you be for your wallet? Will Irish coffees on Christmas morning be too expensive a treat? While many reports initially warned of a costlier holiday season, it turns out that for now, shoppers won’t face the brunt of the cost, said Lily Peachin, founder of Dandelion Wine in New York.

“I don’t foresee (prices) getting too crazy,” she said. “I think everyone is just going to take a little bit of a hit, so nobody is going to eat the entire tariff. It’s not all going to be on the consumer, it’s not all going to be on the retailer, it’s not going to be all on the producer, we’re all going to divvy up that tax.”

Locally owned or niche shops, however, might be more susceptible to price increases.

“For small producers, it really could put some of them in jeopardy if people don’t recognize their products and there’s an additional cost to buy it,” writer and cheese expert Christine Clark said. “Cheesemaking is not a business with a huge margin anyway … it’s a little bit scary.”

Carol Johnson, the owner of Monger’s Palate, an artisanal cheese shop in New York, elaborates on the effects of a tariff on a one-woman shop like hers.

Find out about the most successful one-person businesses in America.

“I can’t absorb these costs like some of the larger cheese shops or grocery stores can, where they’ve either stocked up on hundreds of wheels of Parmigiano-Reggiano in their warehouse beforehand or they already get palletized discounts so they don’t have to necessarily increase the price,” Johnson said. “So if someone wants, for example, a cheese called La Tur, which is very popular with us, it is now increased at least $2 or $3 in price. I’m going to still carry it because I want to support that cheese, but now it’s just up to the consumer as to whether they want to actually pay that extra price or not.”

What’s next?

There is a chance that prices will increase after the holidays as more tariffs come into play, or if the EU retaliates with its own tariffs on American producers. (Boeing, the American aerospace manufacturer, is also accused of receiving illegal subsidies, and the WTO could allow tariffs on American exports to the EU).

“There is some uncertainty about how long the tariffs will last. In the beginning, we thought that maybe they’d go away. Now it looks like there might be more tariffs,” said Clark.

Along with uncertainty about the future, there is also the collateral damage to be considered; the industry projects that 8,000 jobs could be lost in America’s beverage industry alone as a result of tariffs.

Peachin encourages people to spend their money at smaller shops or on smaller producers that are going to face the biggest impact while protecting consumers against these costs.

“We are protecting the consumer at this point. The industry is eating most of the costs of the tariff,” said Peachin. “It’s more important than ever to support the smaller producers and the smaller retailers.”

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Image: Billy Williams

*Correction, Nov. 27, 2019: An earlier version of this story referred to wheels of "parmesan-oregano" cheese. The cheese is called "Parmigiano-Reggiano."