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Pass-Through of Tariffs: Evidence from European Wine Imports
- jjgreen 7mo agoLess French wine going to the US, more for me, yay!
- kpw94 7mo ago"water is wet" kind of study, as tariffs are precisely supposed to increase price for consumers for imported goods... But the last 3 paragraphs are interesting: - Importers raised the price more than needed (i.e. blame tarifs to increase their profit margin) - Price increases took one year to fully reflect to the customers, and persisted nearly one year after the tariffs expired. - chicken-tax-like loopholes implemented wherever possible (for wine apparently it's raising the ABV to more than 14%)
- butILoveLife 7mo agoYour first 2 points make me extra bitter about COVID. Less store hours. Higher prices. Inflation. People in school got a terrible education and it affected my workforce. (But hey 1% of people died, as predicted if we did nothing at all... ) It only reinforces the importance of competition over protectionism. I used to be a walmart fan, but my local store is cheaper now. I didn't bother to look at prices until things were getting silly.
- sofixa 7mo ago> But hey 1% of people died, as predicted if we did nothing at all Nope. Compare the death rates of Sweden vs its neighbours in the Nordics (the closest comparisons we have with similar weather/culture/etc.). Or if you don't care about minimising variables, in the US between states that did lockdowns and mask mandates and those that didn't. In every comparable (e.g. excluding rural vs urban) case, there were more deaths in "doing nothing" than implementing the same basic public health axioms that have held true for centuries. > Inflation That was also helped by Russia invading Ukraine, which increased global prices of multiple important raw materials. But yes, inflation after a period of deflation/economic contraction/restricted travel and consumption was to be expected. > People in school got a terrible education and it affected my workforce It's definitely a bigger issue for them than it is for you. And yeah, it sucks for them. Would have been pretty terrible to tell teachers (who overwhelmingly skew older) they should risk their lives just to keep kids occupied too. > It only reinforces the importance of competition over protectionism. What has that got to do with COVID?
- lostlogin 7mo ago> Compare the death rates of Sweden As a New Zealander, I like to chuck out our achievement of a negative death rate. Covid lockdowns resulted in less New Zealanders dying than usual. But, like elsewhere, economic and social harm were both high.
- pocksuppet 7mo agoYou had 6 weeks of staying at home, and then quarantines for international travellers after that. In return, you had no COVID-19 at all for several years. Seems a fair trade.
- ninalanyon 7mo ago> negative death rate. Norway had that too; without lockdown. Curfews would require a change in the constitution and the last time they happened was during WWII which makes them doubly unpopular.
- dhosek 7mo agoI mean sure more people died than were necessary, but think of the shareholder value that was created!
- izendejas 7mo agoThe thing too many forget is that if we didn't flatten the curve our entire medical system was going to collapse. It's insane that people don't yet understand this concept and can't even empathize with medical professionals. Yes, we all struggled, but try talking to medical professionals to see how they did. When something doesn't happen because enough measures were taken, then it wasn't worth it because it didn't happen?
- sofixa 7mo ago> The thing too many forget is that if we didn't flatten the curve our entire medical system was going to collapse Yep, if things were going well there wouldn't have been makeshift morgues with refrigerated trucks, sick people having to be moved around to different countries, the military deploying field hospitals, corpses piling in the streets. Those examples are from a variety of countries, which shows how bad the situation was globally.
- ceejayoz 7mo ago> (But hey 1% of people died, as predicted if we did nothing at all... ) You're at a football stadium with 100k people. A thousand of them die suddenly. Do you feel safe? > Less store hours. Higher prices. Inflation. At this point, that's just greed. They figured out what the market would bear.
- vladms 7mo agoYou remind me of the fact that humans do not in fact have sensors in the skin to detect specifically wetness. I think given the amount of ideas floating around, it is occasionally good to revisit things that are "known", just in case some underlying assumption changed, especially for economics which is harder to get right as it deals a lot with what human want and do.
- cimi_ 7mo agoI can't see how anyone can think "the exporters pay the tariff" makes any sense. TBH, we'll never know how many people thought it made sense because it didn't matter.
- vladms 7mo agoIn the end money move around. If - for example - the government would just give the citizens the money from the tariffs in equal share (I mean not that I suggest they would, but technically possible), it would be like taking from the citizens that consume more and give it to the citizens that consume less. So, yes, it is correct in a practical immediate sense that "the exporters pay the tariff" but that excludes many relevant issues like how prices evolve (which are paid by the consumers), what the government does with the money (it could share or not) and what others decide to produce (to avoid tariffs). But definitely many people didn't thought of all that ...
- dmix 7mo agoOne of the funny things the tariff dispute made public was how in Canada buying wine/beer from other provinces from within Canada is treated like a foreign import by the provinces (causing a huge price markup ala tariffs and tons of paperwork for small vendors). We have lots of internal trade barriers like that which were ironically originally intended to help small players compete.
- asdff 7mo agoWow. I guess I took american interstate trade for granted.
- dhosek 7mo agoI’ve been reading a presidential bio every year (I’m currently up to Monroe and I hope that I’ll be dead or not reading before I’ll be reading the 44th bio¹) and it’s an interesting way to get focused senses of American history and trade between the former colonies was a big issue before the constitution was instituted. ⸻ 1. Cleveland doesn’t get two bios.
- bryanlarsen 7mo agoThe big one in Canada is licensed labor, and the US has the same problem. Hairdressers not being able to work across state lines without getting another license, for instance.
- gobalini 7mo agoNote we’re only talking about alcohol here. It’s funny how people read something, skip the specifics, assume it applies to everything and then spread misinformation. So if you want a comparison in USA it needs to be something that is regulated by the US government, like hydroxacloroquine.
- tastyfreeze 7mo agoWe are pretty lucky in that regard. It is by design. Open trade among the states was a primary point of argument in ratification of the US Constitution. States were concerned with a federal government having any power to restrict the engine of their own success. As a result the US system was designed to prohibit restricting trade between states and encourage restricting trade at the national border through tariffs. The goal was to encourage internal trade and production that builds national wealth and skills. The government was to make profit off of international trade through tariffs. That structure encouraged government to protect the economic engine domestically to continue profiting from international trade.
- jeffbee 7mo agoI always look at these authors lines and weep a bit. "Aaron B. Flaaen, Ali Hortaçsu, Felix Tintelnot, Nicolás Urdaneta, Daniel Xu" all researchers at American institutions we are in the middle of incinerating.
- drob518 7mo agoIf you've seen one tariff study, you've seen one tariff study. There are so many factors that end up influencing the end-state of the system. It literally depends on the particular type of good, the producer, producer's market shares both in the country applying the tariff as well as globally, the number of tiers of distribution, margin structures of everybody involved, etc., etc. So, sometimes we see an increase; other times, we little to none.
- gruez 7mo agoYeah, the claim of >The researchers estimate that the increase in the retail price to consumers was about 6.9 percent. This was on the $23 pre-tariff retail price, so it amounts to $1.59, which, in dollar terms, exceeded the tariff revenue collected. Is seemingly contradicted by goldman sac's report, which claims consumers only paid 55% of the tariff increase. https://www.idnfinancials.com/news/57938/goldman-sachs-us-consumers-bear-55-of-new-trump-tariff-costs https://www.idnfinancials.com/news/57938/goldman-sachs-us-co...
- lrasinen 7mo agoGoldman speaks of the current tariff regime; the study here looked at 2019-21 wine tariffs. Also the tax burden will fall on different places depending on the markets and the good in question.
- skybrian 7mo agoMaybe we should think of each study as a data point? With enough studies, perhaps we'll get an idea of how much it varies. Does anyone collect them?
- drob518 7mo agoTo what end? It varies a lot. Between 0% and 100%+ of the cost could be passed onto the consumer (100%+ when every distribution tier passes along what came to it and then marked it up). Maybe you can create a statistical distribution with mean/median and standard deviation, but that tells you nothing about what might happen when you next institute another tariff.
- thatmf 7mo agoTL;DR- consumers pay for tariffs. Duh. As someone adjacent to the wine biz, few things worth noting: - Their data source is a major wine importer. The economic realities of the majors versus the smaller, boutique importers, or even the larger independent ones, are very different, because of their market position, reach, their clientele, the type (mass-market) product they carry, etc... in addition to the simple financials of having padding and ability to plan long-term. Anecdotally, most of the smaller-to-mid-size importers I know have actually cut their margins, and are hanging on by a thread. For anyone smaller than the two or three very biggest players, the tariffs have been a drag on business at both ends, and for some have been existential. It's driving consolidation as well, which is never good for consumers. Imagine doing a study on the software industry and only talking to Microsoft. - In the US we have the three tier system (producer -> importer -> distributor -> retailer) and each of those take a cut, obviously, resulting in higher costs. So those tariffs compound at each layer. There are a few exceptions where you can be a "direct import" retailer (e.g. K&L in CA) but these are a small piece of the pie. Don't even get me started on the costs of shipping, the byzantine legal compliance, etc. - As for the 14% thing; I'm skeptical of their insinuation of causality. Relevant to this study, 2018, 2019 were exceptionally hot growing seasons in most of europe, a trend which has unfortunately continued, which naturally lead to higher ABV, even as critical trends move in the opposite direction.
- shiandow 7mo agoWait, am I reading this wrong. The producer and importer try to soften the impact of the tarrifs only for the retailer to massively increase their prices?
- ceejayoz 7mo agoSee also: Grocery stores. Prices went up "due to COVID". Prices will never come down again. (I've no doubt the supply chain was a mess for a hot minute, but years later?)
- asah 7mo agoso that's not true - I worked for years in the grocery business and prices DO come down and in fact, I've seen evidence all over the NYC market of prices falling recently. examples include eggs for $2.99 in some places (!), and other competitive categories like unbranded meat and cheese, pasta, and more. prepared foods seem to be slower, I'm assuming because labor costs continue to rise.
- loloquwowndueo 7mo agoYou worked for years in the grocery business but all you have is anecdata? I also have anecdata, my grocery bill has not come down from pandemic times. Things like eggs are definitely more expensive.
- tartoran 7mo agoPrices never came back to pre-pandemic levels, that is absolutely correct. But if you remember that prices ballooned last year when Trump just took office, eggs were getting more and more expensive, etc and I gotta say prices came down a bit after that, but always never to previous levels.
- ceejayoz 7mo agoSo that's not true. A few months ago: https://www.npr.org/2025/09/19/nx-s1-5539547/grocery-prices-tariffs-food-inflation https://www.npr.org/2025/09/19/nx-s1-5539547/grocery-prices-... > What's the item? Groceries > How has the price changed since before the pandemic? > Up 29% since February 2020, according to the Bureau of Labor Statistics.
- tehlike 7mo agoSurprised noone mentioned refunds going back to the sellers, when in reality customers have paid for it anyways.
- drob518 7mo agoThe original link has nothing to do with any recent tariffs. The study period from 2018 through 2022 and specifically looked tariffs on wine driven by the Airbus/Boeing kerfuffle happening at the time.
- ticulatedspline 7mo agoPeople gripe too much about this. Would you rather the government keep it?
- tehlike 7mo agoYes?
- ticulatedspline 7mo agoWhat? Why? the government is the bad actor in this situation. doesn't that just reward the criminal with all the gains?
- tehlike 7mo agoWell, at least it can be used to offset something. Now companies will get the money back, then what? They will not even reduce prices, probably, so why should we give them the money?
- ticulatedspline 7mo agoSo reading the article, let me get this straight.. The producer is losing money, the importer is losing money, the distributor and retailer had the temerity to not accept losing money and pass on a cost but aren't really making any more money. Due to which you're so upset that the sheer injustice of it all you'd rather see the corrupt government that levied the illegal tariffs to begin with keep the money than accept that the importer might actually come out ahead by happenstance. Yeah, sure. that's totally more fair.
- braincat31415 7mo agoIt is almost impossible to order decent cognac (e.g. Chateau Montifaud) from small french manufacturers. Fine Drams for example simply refuses to ship to the US and to deal with tariffs and paperwork.
- ilovechaz 7mo agoWine and beer, as well as other alcoholic drinks, consumption is way down in the US. Either they jack up prices, or they go out, like a bunch of California wineries have recently. Tariffs are an excuse, not the reason.
- triceratops 7mo agoCratering demand tends to lower prices, not increase them.
- ilovechaz 7mo agoNot in the United States. Especially with an item like wine. Maybe something like cheeseburgers or flapjacks.
- triceratops 7mo agoSure.
- barrkel 7mo agoThe purpose of tariffs, contra Trump warblings about raising money, is to divert expenditure from imports to domestic alternatives. They are a not very effective tool to try and fight the US trade deficit, and in particular, mercantilist policies abroad. Tariffs only work if the price increases are passed on. To work, they need to change consumer behavior, which means they need to increase prices.
- jonathanlydall 7mo agoI feel the greatest trick of American politicians is that the term “tariff” tends to be used by most people instead of “import tax”. I live in South Africa and we have significant import taxes on certain kinds of items, but nobody (aside perhaps from economists/accountants/tax practitioners, etc) calls them tariffs. It’s not the overseas seller who pays extra for the item to be imported, it’s the importer, paid to the tax man. It’s a tax paid on imports. That cost is ultimately passed on to end buyers, such as myself. Why would I generally refer to it as a tariff except for reasons of pedantry?