Just some of the wine- and spirits-packed shelves at Bar and Garden. Courtesy Bar and Garden

Wine

Ever-Looming Wine Tariffs Are Fueling Anxiety Across the Industry in Dallas

The potential 100 percent tariff on wine and other European goods didn’t come to pass—yet. Meanwhile local wine pros are still grappling with the existing 25 percent tariff.

Julie Buckner Lane was born and raised in East Dallas, and she’s witnessed Dallas’ wine awakening, so to speak. Lane got her start in the food and wine realm in the ’90s when the Dallas palate heavily skewed toward “big, bold wines because they paired so well with big steaks,” she says. But in the decades since, Lane saw Dallasites enamored with quirkier wines often sourced from Europe. So three years ago, she opened Bar and Garden on Ross Avenue that stocks organically farmed wines (also other spirits and goods) and hosts weekly tastings all in the name of discovery.

Then we have bars like Veritas Wine Room, where rotating taps or bottles promise something new and interesting in the glass. Restaurants with deep wine lists are plentiful in Dallas, too. But the landscape of such a fertile wine scene in the city may be changing as wine industry folk continue to face additional tariffs on wine imported from France, Germany, Spain, and Britain.

A 16-year dispute about subsidies granted by the European Union to European aerospace company Airbus is stressing out our local wine purveyors. The Trump administration, retaliating against what it (and the World Trade Organization) considers an unfair advantage, imposed heavy taxes on European products—wine, yes, but also parmesan cheese, some Irish whiskies, and other various sundries entirely unrelated to airplanes. Everyone from European producers to American importers, distributors, wholesalers, and restaurants (and many more businesses and workers) have wrestled with that 25 percent tariff since October.

What’s happened since is a whole lot of uncertainty. One sure thing: People in the wine world share a continuous sense of anxiety as they navigate the nebulous up-and-downs of the current as well as still-looming tariffs.

Here’s where we are now. The latest decision, if you could really call it that, came on February 14 when the United States Trade Representative decided to postpone any additional tariff up to 100 percent, but upheld the 25 percent from last year. The office also maintained the ability to enact those tariffs anyway just in case the EU brings any new tax heat to the U.S. Wines and other goods are still being held hostage. The USTR will revisit the tariff (be it removing or adding taxable products, raising or lower tariff percentage, or staying the course) in mid-August.

As the existential threat of a 100 percent tariff remains, there’s nary a wine business (save for, perhaps, big distribution corporations with deeper bank accounts) that isn’t as deeply affected by this environment of uncertainty.

Unlike other stores that may be able to pivot to other wines or higher prices due to the current tariff, neighborhood bottle shops like Bar and Garden have specific visions and markets. “Finding organic, inexpensive wine from Europe is far easier than finding organic, inexpensive wine domestically….I’ve exhausted domestic options,” says Lane, who also has brought in selections from Australia and South America. Everything is priced around $15 to $25 since that’s what Lane has determined her customers are willing to pay. But that 25 percent tariff is passed from importer to distributer (unless they’re big enough to absorb the cost) to wholesalers like Lane, who then has to raise the bottle price. In an industry with already razor thin margins, Lane says additional tariffs “really would be devastating for us.”

While there’s temporary respite from a full-on tariff for now, buying has been on hold in fear of last-minute raised tariffs, thus decision making is harder to do. And on a visceral level, for Lane, she’s felt everything from “absolute panic and anger to somewhat just simmering anxiety.”

Bradley Anderson, who co-owns Veritas Wine Room, Boulevardier, Rapscallion, and Hillside Tavern, concedes that they haven’t felt “a large, direct impact from the 25 percent tariff [as] the initial costs…have been swallowed mostly by the importers” they work with. Still, he agrees that tariffs set at one hundred percent “will be absolutely catastrophic and devastating to the wine industry.”

According to a 2019 breakdown by VinePair, Texas is fourth highest in wine consumption in the U.S. (which is no surprise due to that we’re, uh, big and populous).

About 88 miles south of Dallas as the mockingbird flies is Waco, a central point between here and Austin where David Mayfield distributes much of the wine he procures from small farmers to folks like Julie at Bar and Garden. (He and his wife Abigail also run a wine shop in town.) Mayfield was one of many importers who, as the wine he purchased arrived stateside in October, had to pay that unexpected 25 percent extra in cash, then and there. “We were given, like, 12 days … and it’s not like I could stop the shipment on a boat on its way over here when they announced it.” But he’s hopeful that representatives in the house will pass a bill (H.R. 5911), the Fair Tariff Act of 2019 that was introduced this month, which will refund importers for the unavoidable 25 percent add-on they paid last year.

But the tariff remains, and Mayfield and others in the supply chain have been slashing their margin of profitability—but merely as a temporary solution to an unpredictably lengthy problem. “We’ve all tried to cut back as much as we can…hoping it would go away,” says Mayfield. Anderson, he of Veritas Wine Room, says eventually those costs will trickle down to the consumer and “the customer will then need to decide if they want to continue drinking French wine.”

You could try to make the argument that fewer imported wines could free up opportunity for the domestic stuff—go America! But the ecology of wine doesn’t work like that. To Mayfield’s knowledge, “in Texas, there are no distributors that work just with California,” for example. The European part of anyone’s portfolio helps them purchase and sell product from Washington, Oregon, California, and Texas, too. (Not to mention that’s money to keep the lights on.)

If the U.S. loses its ability to buy European wine, those allocations will go elsewhere.  Mayfield says it can be hard to regain lost relationships, which means American wine drinkers may see some of their favorite bottles—never mind a heftier cost—disappear altogether.

“While case sales of wine from France to the U.S. plummeted by 48 percent during the first month of the 25 percent tariff, exports from France to China grew by 35 percent.” —Harry Root, U.S. Wine Trade Alliance

Rich Rogers, cheesemonger-proprietor of Scardello and a chair of the American Cheese Society, says his shops’ wine buyer also mentioned wines that “might disappear from our market,” but its cheese, of course, that’s on his mind. “Cheese-wise we’re started to see more and more cheeses come across our counter with an increased tariff price,” he says, but he’ll only mark up those products by the tariff amount so customers don’t feel it in their wallets.

Scardello has long carried mostly domestic cheeses (about 65 percent of its inventory). The tariff, especially if it increases more than the current rate, “will affect our ordering patterns; we’ll probably carry less of things because we’ll sell less,” but, promises Rogers, “it won’t stop us from buying the same amount of parmigiano.”

Rogers wouldn’t say whether or not he was hopeful about the future, but offered this: “Ultimately, I don’t think that it will be good for sales, I don’t think it will be good for small producers across the pond. It will have a ripple effect across an industry that has nothing to do with airplanes.”

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