Update: Wine prices 2021 – the Trump wine tariff is finally dead

Will the end of the Trump tariff lead to lower wine prices?

This is the first of two parts updating my wine prices in 2021 post. Today, Part I: What does the end of the Trump wine tariff mean for prices? Part II: The pandemic, wine prices, and the law of supply and demand.

It took the Biden Administration just five months to undo four years of suicidal Trump economic policy, announcing this week that it would end tariffs on European wine, cheese, and spirits. The settlement means an end to decades of wrangling over illegal aircraft subsidies, the impetus for the tariffs.

All of this is terrific news. It would be even more terrific if it meant wine prices, forced higher by the 25 percent tariff on German, Spanish, and French wines, would retreat. My sense, after several days of reporting? We’ll see some prices come down, but we won’t see as many drop as we’d like.

There are a variety of reasons for this:

• Producers, and especially those making wine costing less than $15, tried not to raise prices (or did so minimally) because of the tariff. If they raised prices by the full amount, they were afraid they would lose market share. Hence, there’s not much to give back with the end of the tariff. So wines like the La Vieille Ferme rose, which stayed at $8 or so during the tariff, will still be $8.

• Much of the savings will come from more expensive wines, and especially the highest priced; Champagne, for example, was badly hurt by the tariff. They should drop by most of the 25 percent, and I’ve already seen some evidence of this. One national New York retailer is advertising “up to 25 percent cheaper” on six wines, all costing $20 or more because of the tariff.

• The pandemic’s supply chain tribulations will also slow price reductions. If the wines can’t get here, or cost that much more to ship, we won’t see savings until all is straightened out.

• Bad judgment and premiumization will play their role in keeping prices higher. When this mess started in October 2019, a very smart Italian wine importer told me the tariff was an opportunity for producers – and especially Italian producers, not subject to the tariff – to take market share away from the French and Spanish by holding the line on prices. Sadly, that hasn’t happened the way he thought. I got an email the other day for a $15 Italian chardonnay, which is hardly the way to gain market share during all of this.