When the news broke about the Trump administration threats to impose a 200% tariff on European wines, Jenny Lefcourt, president and co-founder of Jenny and François Selections, was hiking in the Grand Canyon. From the trail, she called her office and froze all shipments.
“Two hundred percent would have put me out of business,” Lefcourt says.
After months of back-and-forths, the levy eventually settled at 15%. Still, the damage was done for all stakeholders in the wine and spirits world. Trust eroded between producers, importers, and the federal government. Margins collapsed across the whole world. The future is shaky for anyone who can’t lower prices.
While the U.S. Court of Appeals recently clipped the administration’s wings—declaring his unilateral levies illegal—those fees remain in place as the case moves toward the Supreme Court for further deliberations.
The global wine and spirits industry remains in suspense; and every point in the supply chain has been forced to compromise in some way or form. From European producers to American importers and wine directors, tariffs have forced every player to readjust their business practices...
Importers on edge
Lefcourt describes those early weeks as a frantic exercise in triage. “I got on the phone with every producer we work with to negotiate pricing.” she says. “Some said, ‘I can sell elsewhere, I don’t need to lower my prices.’ Others said, ‘We’ll meet you halfway, we won’t make money this vintage but we want the wines to remain in the market.’ Every decision was case by case. It was exhausting.”
Though the tariffs themselves have been stressful enough, the uncertainty and volatility has been even more disastrous for Lefcourt and other importers. “Two hundred percent? Twenty five percent? None? Exemptions for goods already in transit? It turns planning into pure gambling,” she says. “That’s terrible for the economy and morale.”
That 15% tariff combined with weaker dollar, higher shipping prices, and already rising costs for land, labor, and viticultural supplies in Europe have pushed expenses for importers over 30% what they were a few years ago.
Yet, many U.S. importers, like Credo Imports, have been sharing the cost burden with producers, cutting their own margins when necessary in an attempt to stave off price increases for consumers. “We had upfront discussions to make sure they felt we were advocates, not adversaries,” says Credo Imports co-owner Matthew Goss.
These escalating costs are seriously impacting the bottom line. Many importers have had to cut jobs or hold off on hiring and expanding their businesses. Lefcourt, for instance, had planned to bring two new employees this year, but didn’t due to lack of time, energy, and capital. “I had to work on strategies for guessing how to price wines in a constantly shifting tariff landscape and put funds aside for paying the tariffs,” she says.
Click HERE to read the full article.