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Where There's A Wine, There's A Way

A winemaker pours rosé at the Chateau Sainte Roseline in the southern France region of Provence. European producers of premium specialty agricultural products like French wine, face a U.S. tariff hike with duties on a range of European goods, including wine.
Daniel Cole

New Trump administration tariffs threaten to raise prices on Italian cheeses, Spanish olive oil, and a wide range of other gourmet foods from Europe. But a Florida company has found a loophole in the new French wine tariff that's big enough to drive a truck through.

Florida Caribbean Distillers has begun importing truckloads of bulk wine from France and bottling the product at its plant between Tampa and Orlando. That conveniently sidesteps the 25% levy imposed last week, as part of a long-running trade battle between Airbus and Boeing.

"It was nice timing on the tariffs' part," said Dave Steiner, the company's national sales vice president. "Certainly was a bit of a gift, but we'll take it."

The company wasn't thinking about tariffs when it uncorked this plan. It simply wanted to capitalize on the fast-growing U.S. market for French Rose.

But its bulk importing strategy gives the company a serendipitous cost advantage, because the new tariffs apply only to wine in bottles of 2 liters or less.

Steiner's company is importing wine in 20- or 40-foot shipping containers, with a giant pouch inside. Think of the world's largest wine-in-a-box.

"It's several thousand gallons at a time we can bring in," Steiner said.

The company is packaging the tariff-free wine in standard bottles — expected to retail for $8.99 to $9.99 — as well as 375 ml cans, which will sell for about $3.99.

"It provides a nice opportunity for us to continue to offer something that our competitors won't be able to, which is tremendous value at a high-quality price point," Steiner said.

Other French wines are now subject to a 25% import tax, as are Scotch whisky, Irish butter, and numerous other European goods. The administration slapped tariffs on $7.5 billion worth of imports last week, in retaliation for what it calls illegal subsidies of Airbus jets.

Economists say rising tariffs encourage companies to look for workarounds. Some, like Steiner's plan, are perfectly legal. But others are less so, and can contribute to inefficiency and corruption.

"It does create this ecosystem which is not particularly healthy for economic activity," said Mary Lovely, a senior fellow at the Peterson Institute for International Economics. "With a 25% tariff, there's a lot of incentive there for people to legally evade or do something a little less up-front."

For Florida Caribbean Distillers, though, the protectionist policy is an unexpected windfall.

"We plan to take advantage, as long as the tariffs will be remaining in place," Steiner said.

The company is marketing its wine under the brand name "Le Rosey," using the hashtag #TrumpTariffFree. It expects to add a sauvignon blanc and a pinot noir next spring.

Copyright 2020 NPR. To see more, visit https://www.npr.org.

Scott Horsley is NPR's Chief Economics Correspondent. He reports on ups and downs in the national economy as well as fault lines between booming and busting communities.