US President Donald Trump declared trade war on the entire world on Wednesday, slapping new tariffs on almost every product made anywhere outside the US.
To the relief of European wine fans in the US, he did not mention specific larger taxes on European wines and spirits, as he had threatened to do. But he did announce a 20 percent tariff on all EU goods that will surely apply to wine.
Significantly, he did not mention additional tariffs on the US' largest trading partners, Canada and Mexico. He complained about Canadian tariffs on US milk. But in the country-by-country chart he distributed that is now widely available online, neither Canada nor Mexico is listed. However, both countries are currently facing possible 25 percent US tariffs on products outside of a trade agreement.
China, the US' third-largest trading partner, is set to be slapped with 34 percent tariffs. Japan, our fourth-largest trading partner, faces tariffs of 24 percent.
Outside the EU, most major wine exporting countries are facing 10 percent tariffs, but South Africa is looking at 30 percent and Israel at 17 percent.
My personal reaction to Trump's announcement was to turn to my wife and say: "Let's go to Japantown and buy some sake." I'm sure I'm not alone in this. Stock market futures plummeted after today's announcement, but it's possible that tomorrow will be one of the busiest shopping days in US history.
Trump announced that 25 percent tariffs on foreign cars will take place at midnight. It's not immediately clear when the other tariffs on the rest of the world will take effect.
As in all wars, the initial attack is just the beginning. The attacked parties get to respond: we'll see what that means for tariffs on US goods.
Also, keep in mind that Trump has not carried through on all of his many tariff threats. This could change, bigly. But for now, let's take a look at winners and losers.
LOSERS: Most American farmers
Bleak outlook for US farmers – and Trump tariffs could make it worse
US agricultural products are usually tariffed by other nations in a trade war. Don't expect our trading partners to be sympathetic to a group that is mostly located in red states and mostly voted for Trump.
WINNERS: US grapegrowers
The many other players in the wine industry are panicking right now, but I'll bet there were some quiet celebrations in eastern Washington and the central valley of California. US wines under $10 have been losing market share for years. Raising the prices of other wines by 10 or 20 percent will make them more competitive.
LOSERS: Scotch whisky and English gin producers
The US actually has a trade surplus with the UK and Trump is lately acting like the "special relationship" matters, so UK producers had hopes of avoiding tariffs entirely. Instead, they got lumped in at 10 percent tariffs with the rest of the world.
WINNERS: US producers of kosher wine
A 17 percent tariff on products from Israel is as surprising as anything on the board, given that the Trump administration's strong support for the country has even extended to deporting foreign students who criticize it.
LOSERS: New Zealand, Australia, Chile and Argentina wine producers
These four countries compete with EU wines on US supermarket shelves and each had some reason to believe they might be spared. But none were.
New Zealand eliminated tariffs in the 1980s and '90s, but nobody told the Trump administration, who claims they tariff US products at 20 percent and slapped them at 10 percent. Trump praised Australia, but tariffed them anyway. Chile is one of the most open trading countries in the world but still got 10 percent tariffs. Argentina president Javier Milei is a Trump supporter who was the first foreign leader to visit him at Mar a Lago after he won the November election. Didn't matter.
BIGGER LOSER: South African wine producers
Elon Musk's home country got slapped with 30 percent tariffs that will basically kill their market in the US. The US is only South Africa's fourth-biggest wine export market after the UK, other African countries combined, and the Netherlands. But South African wineries hoping to sell US-bound wines to other countries are going to face tough competition from every country in the world trying to do the same thing.
WINNER: UK consumers, maybe?
Wine producers from every country now have wines to unload. The UK, which is open to wine from everywhere, could see a greater selection and lower prices as a result.
WINNER: People who like beer more than wine and cocktails
Wine has had a difficult time competing with spirits. But the price of just about every cocktail ingredient just went up: Vermouth, many liqueurs, even many bitters and fancy cocktail cherries.
US wine producers may be able to better compete with EU producers at the low end because of this, but they will also have to raise prices because of higher prices for equipment, including barrels and glass bottles. It's a good time to drink beer in US-made cans.
LOSER: The world economy?
BIGGEST LOSER: The US consumer. Fewer wines that cost more. Thanks a lot.
