Well, for starters, uncertainty.
That uncertainty can be about the what, when, or how much of US tariffs — in other words, about their details.
But that came and went quickly.
In just six months, we’ve shifted from a world built on free trade to one where protectionism is rampant. Whether tariffs may or may not be the right answer to reshoring lost jobs, or simply the latest political tool in President Trump’s agenda, this economic experiment will shape the future in profound ways.
As Mario Draghi, former President of the ECB, put it:
Beyond geopolitics, trade wars have concrete economic consequences: lower margins across supply chains (including for US businesses), higher consumer prices, and weaker demand. Of course, that’s the point—to reduce demand for foreign goods and boost local production.
But when it comes to wine, will American producers really benefit? A protected border often means less access to affordable labour—the largest cost input for many Californian and other US wineries.
Meanwhile, the dollar has weakened by around 8% year-to-date, according to the DXY. Against the pound and the euro, that translates into roughly an additional 10% increase in the price of a French wine sold via London. Tariffs are complex, but one effect is clear: uncertainty cools demand for dollar assets and, by extension, weakens the currency’s purchasing power.
And there’s one thing President Trump might not know—or care about—but it’s arguably the worst possible time to introduce tariffs. The wine industry is already struggling.
So the question is: can you really raise wine prices when demand is already weak?
To help us answer that, I spoke with David Smydo, CEO of Sokolin, one of the oldest wine merchants in the United States, who offered a characteristically optimistic take on what lies ahead.
Happy listening!
If you prefer reading, you can do so here.
Join the conversation in the comments!
Sara
P.S. I took a short break — thank you to all of you, especially the paid subscribers, for your patience. I’ve extended your membership by three months in appreciation.
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