On Friday, the Trump administration will officially enact a massive tariff on food and wines imported from Europe. Leaders of the Dallas food industry aren’t quite sure what will happen yet, but they’re watching carefully.
The 25% tariff will be slapped on all Scotch whisky; non-sparkling French, Spanish and German wines below 14% alcohol by volume; Spanish olive oil; French and Italian pork products; many cookie, biscuit and waffle brands; a wide range of liqueurs; and almost all of Europe’s most famous cheeses, including Parmesan, brie and Swiss.
For many Dallas-area food and drink sellers, the trade war plunges parts of their balance sheets into confusion. The big question is, Who is going to pay for that 25%? Will the original European producers give up a share of their profit in order to keep prices down? Will the American distributors and wholesalers temporarily cover the cost? Or will most of the price be passed along to small local retailers, restaurants and their customers?
“There is a great sense of uncertainty amongst vendors and us,” says Jennifer Uygur, co-owner of Italian restaurants Lucia and Macellaio. “Everybody’s kind of scrambling to figure out what it means.”
Uygur’s restaurants buy tariff-slapped Italian cheeses and popular liqueurs such as Aperol, but none of the pork products are subject to the extra tax, since Lucia and Macellaio cure their own meats.
“It will depend on the producers,” she explains. “Are they going to go, you know, this is a short-term thing, and they hunker down and don’t pass cost to us, or — if the producers don’t take it, will the vendors do it? Or is something that normally costs $10 going to be $15? We’ll try to do what we always do.”
Uygur is talking constantly with colleagues in the industry and reading every news article she can. Just hours after our conversation, the Houston Chronicle published a report about a wine importer in that city who was facing a tax bill five times what he expected for his latest order — a difference of $16,000, or an average of $2 per bottle.
Allison Yoder, co-owner of Gemma and Sachet, is watching the news, too.
“We’re going to see what they give us,” Yoder says. “Maybe we don’t buy as much (wine) at this time on the French higher end, but it really depends on if the importer and distributors and the winery themselves lower their costs.”
Yoder has had conversations with wine distributors about how they plan to mitigate the tariffs, and like many wine enthusiasts, she’s worried about small mom-and-pop wine producers that don’t have the resources to keep up.
Talking about one of her favorite importers, Yoder says, “What he’s going to do is he’s going to ask some of the distributors and some of the wineries themselves and see if they can meet them halfway. Which will bring the tax down for all of us. It’s the little guys that are going to have problems, the wines that are like $15 retail. They have no wiggle room. They’re already slim on margins.”
The good news is many retailers and restaurants have already stocked up on wines and other products that age well to prepare for the holiday season.
Ian Montgomery, owner of Bishop Arts wine shop Neighborhood Cellar, is well-stocked for fall, so his concern is that the tariffs may continue into the new year.
“There’s a ton of wine that’s already sitting in warehouses that’s already been imported,” Montgomery explains. “I’ll probably become a little more nervous at the beginning of next year if the tariffs are still in place and there are a lot of new products that aren’t being ordered.”
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Like Yoder, Montgomery is most worried about lower-cost products with small profit margins.
“The Rothschild family, Mouton and Lafitte, they’re going to be fine,” Montgomery says. “The (prices) go up that much anyway every year. It’s going to be small producers, families, even large producers — anybody who’s making wines at an inexpensive price point, they’re going to be affected. I’ve talked with a lot of importers. People have canceled orders, refused to put product on the ship, they’re just kind of waiting it out to see what happens. It’s kind of weird. Never had anything like this. Gone through a recession in the wine industry, but never a 25% tariff on wine.”
But all of the business owners see a silver lining. Montgomery thinks he might feature more South American products.
“We can kind of do other things, venture out, which is somewhat fun,” Yoder agrees. She plans to persuade more customers at Gemma and Sachet to drink Greek wines. “New Zealand, South Africa, Chile, there’s all those wines that are not going to be taxed.”