Reply to "Prohibition/Tariffs"

Don't confuse me for someone who supports these tariffs, or protective tax policies in general, but in the case of wine, but retailers shouldn't be too affected due to the domestic supply of wine.  If burgundy prices double, retailers will substitute domestic goods in their place. There really shouldn't be a dent to their bottom line. The exception, and this could very well be the case, would be if consumers really demand those specific imports (say burgundy versus Sonoma pinot) and the demand for wine drastically decreases. But generally speaking, there is sparkling wine made domestically, and there is pinot made domestically, and cabs/merlots, and syrahs, etc.  I don't see retailers being as hurt financially as what is being described. While not perfect substitutes, they are pretty close (at least to someone with a crap palate like myself). So long as consumers are okay with the domestic substitutions and overall demand for wine remains unchanged, retailers will be no worse off.  The increased demand for domestic wine should make domestic wineries (and those employed by wineries) better off, as the increase in demand will make both prices and quantity produced increase for their product.  As prices rise for the U.S. consumer, they will be slightly worse off.  The difference between the gain for domestic producers and the loss for domestic consumers is how economists usually decide if a tariff is useful.  And Steve is right, Canadians might be the beneficiary of a glut of French wine, though from all the forums I don't read about the LCBO, it sounds like they may not see a change in price.

There has been lots of economic studies written about protectionist policies, and the general consensus tends to be that tariffs are a net negative.  Wine is interesting though. The difference in quality is completely subjective, yet could very well have an effect on how consumers respond to the change in availability of goods in the marketplace.  

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