Airplanes and Fine Wine
We live in confusing times. Simplicity does not seem to be a goal of any endeavor. And the more complicated the approach, it appears, the better the outcome. Or so it would seem.
I am trying to avoid using the term “tariff” as I know readers will allow their mouse and mind to wander and then to close this article. But here we are, unfortunately, and tariffs have become not just so-what worldwide conditions, but sometimes even push other news right off the front page. Assuming any of us still care about front pages, which used to be indicative of general importance.
Basically, tariffs have become the first response to trade wars. And trade wars have become a common occurrence in the global marketing of many goods. But the mechanics of a trade war are far more hidden than the consuming public suspects.
The deal is that a government, say, England, Spain, France or Germany, provides economic assistance to a large and important corporation, say, Airbus. Airbus then uses that economic assistance to compete for sales with other airplane manufacturers from other countries. That puts the other airplane manufacturers at a distinct disadvantage since they don’t have income or considerations from their respective governments.
Now what happens is that the second country’s airplane manufacturer cries “foul.” So, their government begins a ratchet-up of the cost of goods coming from the Airbus country. But it’s not about airplanes, or airplane parts. It’s about something else.
In this case, the U.S. government adds additional cost to wines, spirits and gourmet goods, which come from the countries that have been assisting Airbus. And, in retaliation, the original offending country puts surcharges on goods coming from the country that tried to level the playing field.
In effect the manufacturers of luxury goods and their customers are penalized for what began as a government’s subsidiary of airplane manufacturing.
All of this is by way of telling you that your love of wine, whiskey, Scotch, cheese and other fun eating and drinking items from Europe is going to cost you more, but not because the cost of making those items has gone up. Not that at all. It’s because the United States is punishing European makers of items associated with luxury living by adding costs to the price of these goods which you purchase in America.
One of the outcomes of airplane manufacturing will be to add costs to things you enjoy eating and drinking. The other outcome could be that you determine that these imported goods are not worth the “new” costs, so you find an alternative from someplace else.
Trade wars are complicated and it’s never an apples to apples dynamic. More often than not it’s a camembert to airplane tail section dynamic.
It appears the tariffs on most wine. except Champagne, and cheeses from France, Scotch from Scotland, wines from the UK and Spain will go into effect this Friday, October 18. It does not appear that wholesalers will put the surcharge on items already in their possession or items in transit. In some cases, certain wineries or distilleries will simply absorb the additional costs, figuring this is a short-term situation.
In any case, you will likely soon pay more for those things you enjoy from Europe, and you should know why. I have no conclusions here. Just muddled facts. Pass the Brie and Burgundy, please.