President-elect Donald Trump‘s proposal to impose tariffs on all imports has set off alarm bells among entrepreneurs in the U.S. food and wine sector. The measure could seriously affect small businesses, increase costs and pass these increases on to consumers.
Small businesses, the most vulnerable
Restaurant and wine distributors fear that the announced tariffs, which include 25% for Mexico and Canada, will impact their ability to operate. Ben Aneff, a wine trade representative, noted that many businesses would not be able to sustain profit margins if tariffs exceed 40%.
In Oklahoma, Noah Bush, owner of a restaurant group, expressed his concern: “Although I would like to continue offering European wines, customers will end up paying the cost overruns if we want to survive”. For his part, DeWayne Schaaf, a restaurant owner in Missouri, noted that the adjustments will likely mean cuts in hours for his employees.
Lessons for 2019
The industry already faced a similar scenario when, in 2019, Trump imposed 25% tariffs on several European products. Entrepreneurs saw sales drop and raised prices to cover the impact. In France, exporters reported a 25% drop in shipments to the United States, representing losses of 600 million euros.
To mitigate the blow at the time, some U.S. businesses purchased large lots before the tariffs went into effect.
Massive Tariffs Create Global Uncertainty
In addition to tariffs on T-MEC partners, Trump threatened 100% tariffs against the BRICS if they challenge the hegemony of the dollar. These policies have raised concerns in Europe, where Gabriel Picard, a leader of wine and spirits exporters in France, warns that a drastic increase in tariffs would close the U.S. market for many companies.
While businessmen are looking for ways to adapt, the impact of these measures could transform trade dynamics. The concern is that, without exceptions for essential products, small businesses and their workers will face the greatest challenges in this new phase of economic tensions.
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