Wondering for those in the US or ItB - how do posted futures prices work when tarriffs are imminent. Will sellers eat the difference or will they either hand over the additional bill to release the product to the customer or cancel the order outright if the customer. Is this a problem or has it been addressed in some way? Apologies if this has been discussed elsewhere in this forum...
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I don't believe it's been discussed very much here, but there's been a lot of chatter from ITB people on WB and Vinous. Sounds like some importers are passing on the costs to the buyer, whereas others are keeping the wine in Europe until this crap blows over.
I believe it's really an "it depends" situation.
If you're an importer you're really screwed. If the tariffs go into effect while your wine is in transit, and they're at the 100% level, when your wine is landed you need to pay them 100% or your wine is held or destroyed. So imagine ordering a container and it's a few hundred thousand dollars. Depending on your terms you pay before departure or you have 30 dyas or whatever your agreement was. But for the tariffs, you need to come up with that immediately to take your wine.
So a few of the smaller importers I talked to aren't going to bring anything over because they don't want to take the risk, which would put them out of business immediately rather than slowly, as they sell down their stock. It's not only for wine - things like olive oil, cheeses, etc., are in the same situation.
Also keep in mind that the stuff isn't going to be held in pristine conditions just because it's perishable.
That's worst case. Best case is that they resolve things. The targeted products were, as you can expect, selected in part by the people who would tend to benefit here. For example, the American Olive Oil Association made sure that Spanish oil was included. The other part was political - the US figured that if they targeted a large number of small producers in Europe, they would collectively make a lot of noise. There is a logic to that but the problem is that the small producers are matched on this side with small importers and those are the ones who will be seriously hurt.
As far as any discussion on Vinous, I'm not a member so haven't seen, but I did see the letter he wrote. To the President. Duh. It's like sending a letter to Santa. You don't write to the Prez as if you're a buddy. Do you expect the President to be in a meeting in the war room and suddenly someone bursts in and exclaims, "Mr. President! We have a very important letter from a wine critic!" So what do they do, drop everything and rush over to read the letter?
You send the letter to the agency handling the tariffs, and more specifically, to the address where you send public comments, which they're required to accept.
There have been a number of letters and comments from various importers that I've seen and by and large, they're fairly weak. Many are also very speculative. They need to state exactly what the direct economic impact will be on Americans. Speculations that people might not want to drink wine any more are pointless and ineffective.
Macron has decided to hold off on Tech Tax until end of 2020 [PS: Trump should be gone] , would this step alleviate the issue of the 100% tariff?
I hope so. Today is the 227th anniversary of the beheading of King Louis XVI. Not sure if that is a factor in Macron's decision.
Thanks to all for the feedback. This will be interesting to follow.