Pass-Through of Tariffs: Evidence from European Wine Imports(nber.org)
nber.org
Pass-Through of Tariffs: Evidence from European Wine Imports
https://www.nber.org/202603/digest/pass-through-tariffs-evidence-european-wine-imports
86 comments
Wait, am I reading this wrong. The producer and importer try to soften the impact of the tarrifs only for the retailer to massively increase their prices?
Many retailers increase their prices by multiples of the tariff increase rather than a straight passthrough so that they can maintain their margins. It's probably why a lot of the biggest retailers with monopolies aren't complaining much about tariffs. They mostly keep the same margin and actually increase revenue. Meanwhile, it's been incredibly damaging to small businesses and consumers. Functionally, tariffs have been a massive wealth transfer.
Can't repeat this enough and I'd like to make sure to connect the dots. The Big Beautiful Bill that was signed into law cut taxes. To keep the US Federal Government from going (even more) into debt, Trump introduced aggressive tariffs (it doesn't matter that he introduced the tariffs before the BBB became law because he/they knew the BBB would pass and that was baked into the tariff decision).
The BBB tax cuts benefit the wealthy much more than the average person. The tariffs are borne by both the wealthy and by the average person when they buy tariffed goods, but those tariffs are easily absorbed by the wealthy while acting as an additional tax on the average person by increasing prices. This is just about as direct a transfer of wealth from the average person to the wealthy as you could possibly put into place (barring an actual transfer where the average person is taxed and those dollars are literally transferred directly into a wealthy person's bank account).
In a way, it's a genius move. Convince a healthy chunk of the US population that you're on a populist crusade to bring jobs back to America while increasing the wealth of the wealthy and taking even more of the average person's income. Don't forget that the reason the jobs were exported in the first place was to decrease costs so that, you guessed it, wealthy people would get wealthier (but at least in that scenario the cost of a tv went way down, am I right???).
All that said, I don't mean to suggest that bringing jobs back isn't actually a goal. It's just not the primary goal. My take on the priorities of the current admin's tax policy, including the tariffs (which, broken record, are taxes) 1. decrease taxes on the wealthy 2. decrease income taxes on everyone else who pays taxes 3. get "everyone else who pays taxes" to fund the decreased taxes on the wealthy 4. bring jobs back. Somewhere in there is also "create a mechanism for opaque profiteering." I'm not quite sure where that falls on the list. Cynically it's probably number 2.
The BBB tax cuts benefit the wealthy much more than the average person. The tariffs are borne by both the wealthy and by the average person when they buy tariffed goods, but those tariffs are easily absorbed by the wealthy while acting as an additional tax on the average person by increasing prices. This is just about as direct a transfer of wealth from the average person to the wealthy as you could possibly put into place (barring an actual transfer where the average person is taxed and those dollars are literally transferred directly into a wealthy person's bank account).
In a way, it's a genius move. Convince a healthy chunk of the US population that you're on a populist crusade to bring jobs back to America while increasing the wealth of the wealthy and taking even more of the average person's income. Don't forget that the reason the jobs were exported in the first place was to decrease costs so that, you guessed it, wealthy people would get wealthier (but at least in that scenario the cost of a tv went way down, am I right???).
All that said, I don't mean to suggest that bringing jobs back isn't actually a goal. It's just not the primary goal. My take on the priorities of the current admin's tax policy, including the tariffs (which, broken record, are taxes) 1. decrease taxes on the wealthy 2. decrease income taxes on everyone else who pays taxes 3. get "everyone else who pays taxes" to fund the decreased taxes on the wealthy 4. bring jobs back. Somewhere in there is also "create a mechanism for opaque profiteering." I'm not quite sure where that falls on the list. Cynically it's probably number 2.
[deleted]
Based on the graph, the increase in cost to the retailer was $0.49 and they marked up $1.10. I imagine this is pretty standard markup but multiplies the effect of the tariff and passes it to the consumer, not to mention the producer and importer.
also, I'm not sure retailers are necessarily to blame. some use pretty simple math in calculating the retail price based on cost and don't necessarily have visibility into the tariffs.
We know exactly who is to blame.
I can share my own experience as a small business owner. I sell coffee. I engage in some direct trade and also buy some coffee from domestic vendors who already have the coffee stateside.
I primarily buy Costa Rican coffee and they got hit with a 10% tariff. That adds like 5 cents to a latte. Whatever. I’m not raising my prices over that. But then Brazil got nailed with much higher tariffs and they are the #1 exporter. Colombia was another one that got hit with high tariffs and they are a major producer. Suddenly, that was driving up the cost of my Costa Rican coffee as demand that was previously met by Brazil and Colombia shifted to other countries. I went from being the exclusive U.S. importer of my coffee to being in a bidding war. The last time I imported coffee, it cost me twice as much as the shipment prior. Then they tried to raise the price again. I ended up having to find new suppliers before things eventually settled down when the people in charge realized you can’t produce coffee in the U.S. (Technically, Hawaii produces exorbitantly priced coffee at a max capacity that amounts to a rounding error relative to domestic demand. There’s no other place in the U.S. with the climate to grow coffee. Besides, it’s incredibly labor intensive. Coffee essentially can’t be produced here.)
Cups were a real pain in the ass too. We were buying our stuff from the Dominican Republic and Latin America, but people are mostly getting that stuff from China. When China became prohibitively expensive, everyone rushed to find other suppliers. That drove prices up and messed up lead times in the short term. The story with most packaging was the same.
Literally every single item required for my business increased in price. It turns out nobody produces anything 100% domestically without any foreign input. My syrups are made in the USA but the bottles they come in are from somewhere else. My empanada shells come from Argentina. Everything from chocolate to pistachios to straws and cleaning supplies. Everything is a product of global trade, whether it’s ingredients, raw materials, packaging, or the machinery and tools used to manufacture it. To maintain my own equipment, I have to buy parts from Italy.
I held out for several months. I was feeling it as a business owner as well as every time I went to the store. I knew my customers were feeling it. I live in the neighborhood where my business is located. A lot of my customers are retirees on a fixed income. The last thing I want to do is add to the pressure. Meanwhile, I have employees who deserve a living wage. I have my own needs. I dumped some products and suppliers that became too expensive for me to sell and have any remaining dignity. I saved everywhere I could without compromising on quality.
About 7 months into this bullshit I had to raise prices for most of my products. It couldn’t be helped. Still, I’m embarrassed at how much we have to charge for some items.
I feel like the last year has been complete chaos. It’s economic shocks and supply chain disruptions everywhere I look. It’s just one thing after another and that’s before I even turn on the news.
I can share my own experience as a small business owner. I sell coffee. I engage in some direct trade and also buy some coffee from domestic vendors who already have the coffee stateside.
I primarily buy Costa Rican coffee and they got hit with a 10% tariff. That adds like 5 cents to a latte. Whatever. I’m not raising my prices over that. But then Brazil got nailed with much higher tariffs and they are the #1 exporter. Colombia was another one that got hit with high tariffs and they are a major producer. Suddenly, that was driving up the cost of my Costa Rican coffee as demand that was previously met by Brazil and Colombia shifted to other countries. I went from being the exclusive U.S. importer of my coffee to being in a bidding war. The last time I imported coffee, it cost me twice as much as the shipment prior. Then they tried to raise the price again. I ended up having to find new suppliers before things eventually settled down when the people in charge realized you can’t produce coffee in the U.S. (Technically, Hawaii produces exorbitantly priced coffee at a max capacity that amounts to a rounding error relative to domestic demand. There’s no other place in the U.S. with the climate to grow coffee. Besides, it’s incredibly labor intensive. Coffee essentially can’t be produced here.)
Cups were a real pain in the ass too. We were buying our stuff from the Dominican Republic and Latin America, but people are mostly getting that stuff from China. When China became prohibitively expensive, everyone rushed to find other suppliers. That drove prices up and messed up lead times in the short term. The story with most packaging was the same.
Literally every single item required for my business increased in price. It turns out nobody produces anything 100% domestically without any foreign input. My syrups are made in the USA but the bottles they come in are from somewhere else. My empanada shells come from Argentina. Everything from chocolate to pistachios to straws and cleaning supplies. Everything is a product of global trade, whether it’s ingredients, raw materials, packaging, or the machinery and tools used to manufacture it. To maintain my own equipment, I have to buy parts from Italy.
I held out for several months. I was feeling it as a business owner as well as every time I went to the store. I knew my customers were feeling it. I live in the neighborhood where my business is located. A lot of my customers are retirees on a fixed income. The last thing I want to do is add to the pressure. Meanwhile, I have employees who deserve a living wage. I have my own needs. I dumped some products and suppliers that became too expensive for me to sell and have any remaining dignity. I saved everywhere I could without compromising on quality.
About 7 months into this bullshit I had to raise prices for most of my products. It couldn’t be helped. Still, I’m embarrassed at how much we have to charge for some items.
I feel like the last year has been complete chaos. It’s economic shocks and supply chain disruptions everywhere I look. It’s just one thing after another and that’s before I even turn on the news.
And I bet when you did eventually raise your prices, you raised them by more than you strictly needed to. Partly to help offset the losses you took for the 7 months you didn't raise prices, and partly to give yourself enough margin so that if your supplier's prices go up tomorrow (which they will) you don't have to raise your prices immediately.
That's classic "prices are sticky behavior". Prices change less often, and by more, than they would in a classical economics model.
That's classic "prices are sticky behavior". Prices change less often, and by more, than they would in a classical economics model.
Nobody is "trying to soften the impact of tariffs". Everyone was and is trying to maximize profits. Who ends up paying has to do with "elasticity" which roughly is about how much the tax actually impacts you.
In this case, it ended up that the retailer raised prices, probably because the retailer can just sell domestic wine for cheaper (close substitute). Retailer profits still didn't increase because of reductions in sales (~12% iirc) and increase in after-tariff inventory prices. This is textbook econ 101. Substitute, profit maximization of a firm, supply and demand etc.
You're confusing exporter and importer lowering prices with the retailer facing lower after-tariff inventory costs. Inventory costs still went up.
In this case, it ended up that the retailer raised prices, probably because the retailer can just sell domestic wine for cheaper (close substitute). Retailer profits still didn't increase because of reductions in sales (~12% iirc) and increase in after-tariff inventory prices. This is textbook econ 101. Substitute, profit maximization of a firm, supply and demand etc.
You're confusing exporter and importer lowering prices with the retailer facing lower after-tariff inventory costs. Inventory costs still went up.
Never miss an opportunity to raise prices.
Yes, that sounds exactly correct.
Prices only go up, all that's required is a plausible excuse.
This is what happens when you shape your entire individual and cultural identity around "number go up"
Prices only go up, all that's required is a plausible excuse.
This is what happens when you shape your entire individual and cultural identity around "number go up"
Retailer profits from foreign wine decreased because of reductions in sales (~12% iirc). This is textbook econ 101, profit maximization of a firm, supply and demand etc.
Taxes make after tax prices go up and reduce profits due to reduced quantity.
No reason to go searching for a "plausible excuse" or some greater critique of culture.
Taxes make after tax prices go up and reduce profits due to reduced quantity.
No reason to go searching for a "plausible excuse" or some greater critique of culture.
See also: Grocery stores. Prices went up "due to COVID". Prices will never come down again.
(I've no doubt the supply chain was a mess for a hot minute, but years later?)
(I've no doubt the supply chain was a mess for a hot minute, but years later?)
so that's not true - I worked for years in the grocery business and prices DO come down and in fact, I've seen evidence all over the NYC market of prices falling recently.
examples include eggs for $2.99 in some places (!), and other competitive categories like unbranded meat and cheese, pasta, and more.
prepared foods seem to be slower, I'm assuming because labor costs continue to rise.
examples include eggs for $2.99 in some places (!), and other competitive categories like unbranded meat and cheese, pasta, and more.
prepared foods seem to be slower, I'm assuming because labor costs continue to rise.
So that's not true. A few months ago:
https://www.npr.org/2025/09/19/nx-s1-5539547/grocery-prices-...
> What's the item? Groceries
> How has the price changed since before the pandemic?
> Up 29% since February 2020, according to the Bureau of Labor Statistics.
https://www.npr.org/2025/09/19/nx-s1-5539547/grocery-prices-...
> What's the item? Groceries
> How has the price changed since before the pandemic?
> Up 29% since February 2020, according to the Bureau of Labor Statistics.
"That's not true" is too strong a statement on your part.
The statistic you cite does not necessarily contradict what the parent comment is saying. "Up 29% since February 2020" is an absolute change since a specific point. The parent comment is saying prices have "come down" i.e. since their peak. It can still be up overall, so long as it's not up as high as it was at one point.
EDIT: To be clear, the parent comment might still be wrong, or might be right only within a biased sample (i.e. their own experience). I'm only making the point that the statistic you're referencing does not outright disprove what they're saying. Prices can be up since six years ago AND down since two years ago (random time periods chosen for illustration only).
The statistic you cite does not necessarily contradict what the parent comment is saying. "Up 29% since February 2020" is an absolute change since a specific point. The parent comment is saying prices have "come down" i.e. since their peak. It can still be up overall, so long as it's not up as high as it was at one point.
EDIT: To be clear, the parent comment might still be wrong, or might be right only within a biased sample (i.e. their own experience). I'm only making the point that the statistic you're referencing does not outright disprove what they're saying. Prices can be up since six years ago AND down since two years ago (random time periods chosen for illustration only).
I'm gonna value national stats over unsourced anecdotal assertions.
At no point has the US entered deflation so far this millennium.
At no point has the US entered deflation so far this millennium.
The US did have deflation in the fourth quarter of 2008:
https://www.ebsco.com/research-starters/economics/deflation
Of course this is talking about the overall price level. The prices in specific sectors can fluctuate independently of that. Food and energy in particular are excluded from core inflation because they're especially volatile.
https://www.ebsco.com/research-starters/economics/deflation
Of course this is talking about the overall price level. The prices in specific sectors can fluctuate independently of that. Food and energy in particular are excluded from core inflation because they're especially volatile.
You worked for years in the grocery business but all you have is anecdata?
I also have anecdata, my grocery bill has not come down from pandemic times. Things like eggs are definitely more expensive.
I also have anecdata, my grocery bill has not come down from pandemic times. Things like eggs are definitely more expensive.
Prices never came back to pre-pandemic levels, that is absolutely correct. But if you remember that prices ballooned last year when Trump just took office, eggs were getting more and more expensive, etc and I gotta say prices came down a bit after that, but always never to previous levels.
Wages also changed since then. During COVID food outpaced wages. Since then, wages have outpaced food. Maybe not for you but on average.
Just like food prices didn't just jump one day, they won't just drop one day. We target 2% inflation, so they'll still go up, but slower.
Going up slower than wages means better affordability.
Just like food prices didn't just jump one day, they won't just drop one day. We target 2% inflation, so they'll still go up, but slower.
Going up slower than wages means better affordability.
Prices went up because of this:
https://fred.stlouisfed.org/series/M1SL
https://fred.stlouisfed.org/series/M1SL
What's your explanation for the mechanism? Because my understanding is that the M1 spike was largely an accounting rule change [0], not a "money printer go brr."
[0] https://collabfund.com/blog/the-fed-isnt-printing-as-much-mo...
[0] https://collabfund.com/blog/the-fed-isnt-printing-as-much-mo...
As your link says, the spike was the result of a change in policy, not an accounting rule change. Effectively, there is very little difference between printing the money or just making some extra money available for use.
The money printer was also going brr. And that is probably the cause for some of the inflation.
The money printer was also going brr. And that is probably the cause for some of the inflation.
This is a deliberate choice by Congress to give the Fed a mandate to target 2% inflation. In particular Congress hasn't given them any instruction to try to make up for mistakes. If inflation overshoots in one year then they don't try to undershoot in the next year. They just keep trying to hit 2% inflation.
So if retailers tried to lower prices to pre-COVID levels then they would fail. The Fed would see the falling prices and cut rates until 2% inflation was achieved.
So if retailers tried to lower prices to pre-COVID levels then they would fail. The Fed would see the falling prices and cut rates until 2% inflation was achieved.
At least where I live I have the feeling that groceries got expensive faster than 2% per year for a number of years now.
One of the funny things the tariff dispute made public was how in Canada buying wine/beer from other provinces from within Canada is treated like a foreign import by the provinces (causing a huge price markup ala tariffs and tons of paperwork for small vendors). We have lots of internal trade barriers like that which were ironically originally intended to help small players compete.
Ontario and Nova Scotia just announced yesterday they plan to stop this. Hopefully Quebec follows suit.
https://www.cbc.ca/news/canada/nova-scotia/ontario-nova-scot...
https://www.cbc.ca/news/canada/nova-scotia/ontario-nova-scot...
"Help small players compete" isn't really how I'd interpret Ontario's wine industry, which is -- like so much of Canadian capitalism -- dominated by only two companies, Vincor and Andrew Peller. They have effectively achieved regulatory capture having established in the 80s a retailing, tariff, taxation, regulatory (VQA and other things), and even municipal zoning (go look at Niagara and area zoning laws some time about things like minimum acreage etc) that squeezes out small players in favour of their own operations.
This all came out of the signing of the original FTA in the 80s. The established players at the time were basically given a permanent advantage as part of negotiations around that. (For 30 years only those two companies could run their own retail stores for example).
Through acquisition and obfuscation they've built up a whole trading card stack of wine labels, that make it look like there's far more diversity here than ther e is. The story in the Ontario wine industry is a lot like how our tech sector works -- Vincor is Google, and smaller wineries are startups, and the "exit strategy" is to get bought up by them. Otherwise you'll probably perish.
Even the VQA "quality" descriptors are written to favour their own established businesses.
(Some chipping away at this recently at least. I hate Doug Ford but he's the first government to really undermine these monopolies in the last 40 years because by opening up retailing at grocery stores and gas stations etc. And VQA has become a little less restrictive about things like varietal choices etc in the last 5 years.)
Wish I knew less about this subject. I used to fantasize about operating my own small winery. Something that's not possible in Ontario unless you're well connected, extremely rich, or masochistic (or preferably all of the above).
This all came out of the signing of the original FTA in the 80s. The established players at the time were basically given a permanent advantage as part of negotiations around that. (For 30 years only those two companies could run their own retail stores for example).
Through acquisition and obfuscation they've built up a whole trading card stack of wine labels, that make it look like there's far more diversity here than ther e is. The story in the Ontario wine industry is a lot like how our tech sector works -- Vincor is Google, and smaller wineries are startups, and the "exit strategy" is to get bought up by them. Otherwise you'll probably perish.
Even the VQA "quality" descriptors are written to favour their own established businesses.
(Some chipping away at this recently at least. I hate Doug Ford but he's the first government to really undermine these monopolies in the last 40 years because by opening up retailing at grocery stores and gas stations etc. And VQA has become a little less restrictive about things like varietal choices etc in the last 5 years.)
Wish I knew less about this subject. I used to fantasize about operating my own small winery. Something that's not possible in Ontario unless you're well connected, extremely rich, or masochistic (or preferably all of the above).
> lots of internal trade barriers like that
If by "lots" you mean 2: alcohol and licensed labor. There are other things that could be easier, but they're not true barriers. Like differences in building codes.
If by "lots" you mean 2: alcohol and licensed labor. There are other things that could be easier, but they're not true barriers. Like differences in building codes.
Tbf they did start to reduce a bunch of provincial trade barriers via Canadian Free Trade Agreement (https://www.cfta-alec.ca/) which was a project started a decade ago. They explicitly excluded alcohol though.
Wow. I guess I took american interstate trade for granted.
We are pretty lucky in that regard. It is by design. Open trade among the states was a primary point of argument in ratification of the US Constitution. States were concerned with a federal government having any power to restrict the engine of their own success.
As a result the US system was designed to prohibit restricting trade between states and encourage restricting trade at the national border through tariffs. The goal was to encourage internal trade and production that builds national wealth and skills. The government was to make profit off of international trade through tariffs. That structure encouraged government to protect the economic engine domestically to continue profiting from international trade.
As a result the US system was designed to prohibit restricting trade between states and encourage restricting trade at the national border through tariffs. The goal was to encourage internal trade and production that builds national wealth and skills. The government was to make profit off of international trade through tariffs. That structure encouraged government to protect the economic engine domestically to continue profiting from international trade.
The big one in Canada is licensed labor, and the US has the same problem. Hairdressers not being able to work across state lines without getting another license, for instance.
I’ve been reading a presidential bio every year (I’m currently up to Monroe and I hope that I’ll be dead or not reading before I’ll be reading the 44th bio¹) and it’s an interesting way to get focused senses of American history and trade between the former colonies was a big issue before the constitution was instituted.
⸻
1. Cleveland doesn’t get two bios.
⸻
1. Cleveland doesn’t get two bios.
Thank the founders for the Commerce Clause, at least when it's applied correctly and isn't being abused.
Note we’re only talking about alcohol here. It’s funny how people read something, skip the specifics, assume it applies to everything and then spread misinformation.
So if you want a comparison in USA it needs to be something that is regulated by the US government, like hydroxacloroquine.
So if you want a comparison in USA it needs to be something that is regulated by the US government, like hydroxacloroquine.
I feel the greatest trick of American politicians is that the term “tariff” tends to be used by most people instead of “import tax”.
I live in South Africa and we have significant import taxes on certain kinds of items, but nobody (aside perhaps from economists/accountants/tax practitioners, etc) calls them tariffs.
It’s not the overseas seller who pays extra for the item to be imported, it’s the importer, paid to the tax man. It’s a tax paid on imports. That cost is ultimately passed on to end buyers, such as myself. Why would I generally refer to it as a tariff except for reasons of pedantry?
I live in South Africa and we have significant import taxes on certain kinds of items, but nobody (aside perhaps from economists/accountants/tax practitioners, etc) calls them tariffs.
It’s not the overseas seller who pays extra for the item to be imported, it’s the importer, paid to the tax man. It’s a tax paid on imports. That cost is ultimately passed on to end buyers, such as myself. Why would I generally refer to it as a tariff except for reasons of pedantry?
If you've seen one tariff study, you've seen one tariff study. There are so many factors that end up influencing the end-state of the system. It literally depends on the particular type of good, the producer, producer's market shares both in the country applying the tariff as well as globally, the number of tiers of distribution, margin structures of everybody involved, etc., etc. So, sometimes we see an increase; other times, we little to none.
Well, lucky for us we've seen multiple, broader tariff studies, all concurring in their conclusions:
https://libertystreeteconomics.newyorkfed.org/2026/02/who-is...
https://www.nber.org/papers/w34620
https://www.kielinstitut.de/publications/americas-own-goal-w...
This one has even more egregious findings:
> Pass-through at the border is incomplete, yet consumers paid more than the tariff revenue collected.
Wonder how many other industries used tariffs as an excuse to further juice their profits. (Edit - turns out this study is looking at pre-2021 data, so we don't even know what they've done this time!)
https://libertystreeteconomics.newyorkfed.org/2026/02/who-is...
https://www.nber.org/papers/w34620
https://www.kielinstitut.de/publications/americas-own-goal-w...
This one has even more egregious findings:
> Pass-through at the border is incomplete, yet consumers paid more than the tariff revenue collected.
Wonder how many other industries used tariffs as an excuse to further juice their profits. (Edit - turns out this study is looking at pre-2021 data, so we don't even know what they've done this time!)
This doesn't increase their profits because, consistent with economics, increasing prices reduces quantity. Profit depends on the amount you sell, not just the price.
That's true in absolute numbers (sales volume goes down), but in terms of margins (profit / sale) they're still doing better than they should have. As the study in TFA implies, if the consumers paid more than the tariffs were collected, the retailer in the middle must have pocketed the difference.
No, that's not what is happening. From the paper:
>The reason is that markups along the chain of intermediation between importer and consumer can scale up the percent pass-through in tariff costs, cumulating over distribution stages and resulting in a direct dollar impact on prices to be greater than tariffs paid, even though the percent change in consumer price is less than the tariff ad-valorem rate.
The retailer is paying more for its stock. Everyone loses despite higher prices.
>The reason is that markups along the chain of intermediation between importer and consumer can scale up the percent pass-through in tariff costs, cumulating over distribution stages and resulting in a direct dollar impact on prices to be greater than tariffs paid, even though the percent change in consumer price is less than the tariff ad-valorem rate.
The retailer is paying more for its stock. Everyone loses despite higher prices.
Ah I see, I had misunderstood, the discrepancy in tariff revenue and what the consumer pays is due to the markups at each stage of distribution successively absorbing minor portions of the price increase until the consumer bears most of it. Took me a while to get my head around the numbers, but makes sense now, thanks for the correction!
[deleted]
Yeah, the claim of
>The researchers estimate that the increase in the retail price to consumers was about 6.9 percent. This was on the $23 pre-tariff retail price, so it amounts to $1.59, which, in dollar terms, exceeded the tariff revenue collected.
Is seemingly contradicted by goldman sac's report, which claims consumers only paid 55% of the tariff increase.
https://www.idnfinancials.com/news/57938/goldman-sachs-us-co...
>The researchers estimate that the increase in the retail price to consumers was about 6.9 percent. This was on the $23 pre-tariff retail price, so it amounts to $1.59, which, in dollar terms, exceeded the tariff revenue collected.
Is seemingly contradicted by goldman sac's report, which claims consumers only paid 55% of the tariff increase.
https://www.idnfinancials.com/news/57938/goldman-sachs-us-co...
Goldman speaks of the current tariff regime; the study here looked at 2019-21 wine tariffs.
Also the tax burden will fall on different places depending on the markets and the good in question.
Also the tax burden will fall on different places depending on the markets and the good in question.
Maybe we should think of each study as a data point? With enough studies, perhaps we'll get an idea of how much it varies.
Does anyone collect them?
Does anyone collect them?
To what end? It varies a lot. Between 0% and 100%+ of the cost could be passed onto the consumer (100%+ when every distribution tier passes along what came to it and then marked it up). Maybe you can create a statistical distribution with mean/median and standard deviation, but that tells you nothing about what might happen when you next institute another tariff.
Most of economics is educated guessing, and having more data (hopefully) leads to better guesses.
With this study there's plenty of leads to follow. Does the ABV have an impact? What about the base price? France vs Italy?
With this study there's plenty of leads to follow. Does the ABV have an impact? What about the base price? France vs Italy?
Who the fuck is "we" as a cursory search has every economist saying "tarriffs are dumb"
We the fuck is we. Consumers, that is. "Tariffs are dumb" sounds more like a temper tantrum than a meaningful comment from an actual economist.
While a bit reductionist, it's pretty much right. Tariffs can work if, and only if, the market believes the tariffs will last long enough to spin up entire industries, and then recoup that investment.
The problem with Trump's tariffs is that everyone knows they are relatively short term. At most, they'll last until the end of Trump's presidency, and even that's assuming that they don't get struck down by the courts, or Trump flip-flops on them like he does everything else.
Without the ability to credibly ensure their ongoing existence, tariffs fail their only real purpose of incentivizing domestic manufacturing, instead acting as a regressive tax on your population.
The problem with Trump's tariffs is that everyone knows they are relatively short term. At most, they'll last until the end of Trump's presidency, and even that's assuming that they don't get struck down by the courts, or Trump flip-flops on them like he does everything else.
Without the ability to credibly ensure their ongoing existence, tariffs fail their only real purpose of incentivizing domestic manufacturing, instead acting as a regressive tax on your population.
> At most, they'll last until the end of Trump's presidency
Eh, you don't think Vance will keep them going when he wins in 28? I do agree that the uncertainty is an issue.
Eh, you don't think Vance will keep them going when he wins in 28? I do agree that the uncertainty is an issue.
Probably not. The tariffs are a lever for Trump to personally work out self-enriching deals with individual countries. Vance doesn't have the kinds of connections that Trump has to leverage those kinds of deals, he's only really tied to Theil and company who put him in his current seat.
I also put Vance's odds of winning real low, unless Trump dies rather soon. Vance was the first VP pick since we started doing political polling that reduced his ticket's approval rating. He's not nearly popular enough to keep up the cult of personality that Trump has built. If he's not President by the next election, I doubt he'd win the primaries.
I also put Vance's odds of winning real low, unless Trump dies rather soon. Vance was the first VP pick since we started doing political polling that reduced his ticket's approval rating. He's not nearly popular enough to keep up the cult of personality that Trump has built. If he's not President by the next election, I doubt he'd win the primaries.
"We find that nearly 90 percent of the tariffs’ economic burden fell on U.S. firms and consumers." https://libertystreeteconomics.newyorkfed.org/2026/02/who-is...
"we find that tariff increases are associated with an economically and statistically sizeable and persistent decline in output growth" https://pmc.ncbi.nlm.nih.gov/articles/PMC7255316/
"Overall, the evidence implies that tariff increases depress economic activity and trade once their indirect and general-equilibrium effects are taken into account." https://www.nber.org/system/files/working_papers/w34852/w348...
Hey, but the vibes of the consumer, right? Except the vibes of the consumer is at an all time low ( https://www.pewresearch.org/politics/2026/02/04/a-year-into-...) With a notable exception being republicans, i.e., the death cult who screamed "No New Wars!" and "Kamala will start WW3" and are not sucking off daddy Trump's Iran war.
"we find that tariff increases are associated with an economically and statistically sizeable and persistent decline in output growth" https://pmc.ncbi.nlm.nih.gov/articles/PMC7255316/
"Overall, the evidence implies that tariff increases depress economic activity and trade once their indirect and general-equilibrium effects are taken into account." https://www.nber.org/system/files/working_papers/w34852/w348...
Hey, but the vibes of the consumer, right? Except the vibes of the consumer is at an all time low ( https://www.pewresearch.org/politics/2026/02/04/a-year-into-...) With a notable exception being republicans, i.e., the death cult who screamed "No New Wars!" and "Kamala will start WW3" and are not sucking off daddy Trump's Iran war.
I always look at these authors lines and weep a bit. "Aaron B. Flaaen, Ali Hortaçsu, Felix Tintelnot, Nicolás Urdaneta, Daniel Xu" all researchers at American institutions we are in the middle of incinerating.
Surprised noone mentioned refunds going back to the sellers, when in reality customers have paid for it anyways.
The original link has nothing to do with any recent tariffs. The study period from 2018 through 2022 and specifically looked tariffs on wine driven by the Airbus/Boeing kerfuffle happening at the time.
People gripe too much about this. Would you rather the government keep it?
Yes?
What? Why? the government is the bad actor in this situation. doesn't that just reward the criminal with all the gains?
Well, at least it can be used to offset something.
Now companies will get the money back, then what? They will not even reduce prices, probably, so why should we give them the money?
Now companies will get the money back, then what? They will not even reduce prices, probably, so why should we give them the money?
So reading the article, let me get this straight.. The producer is losing money, the importer is losing money, the distributor and retailer had the temerity to not accept losing money and pass on a cost but aren't really making any more money. Due to which you're so upset that the sheer injustice of it all you'd rather see the corrupt government that levied the illegal tariffs to begin with keep the money than accept that the importer might actually come out ahead by happenstance.
Yeah, sure. that's totally more fair.
Yeah, sure. that's totally more fair.
It is almost impossible to order decent cognac (e.g. Chateau Montifaud) from small french manufacturers. Fine Drams for example simply refuses to ship to the US and to deal with tariffs and paperwork.
Wine and beer, as well as other alcoholic drinks, consumption is way down in the US. Either they jack up prices, or they go out, like a bunch of California wineries have recently. Tariffs are an excuse, not the reason.
Cratering demand tends to lower prices, not increase them.
Not in the United States. Especially with an item like wine.
Maybe something like cheeseburgers or flapjacks.
Sure.
Less French wine going to the US, more for me, yay!
The purpose of tariffs, contra Trump warblings about raising money, is to divert expenditure from imports to domestic alternatives. They are a not very effective tool to try and fight the US trade deficit, and in particular, mercantilist policies abroad.
Tariffs only work if the price increases are passed on. To work, they need to change consumer behavior, which means they need to increase prices.
Tariffs only work if the price increases are passed on. To work, they need to change consumer behavior, which means they need to increase prices.
"water is wet" kind of study, as tariffs are precisely supposed to increase price for consumers for imported goods... But the last 3 paragraphs are interesting:
- Importers raised the price more than needed (i.e. blame tarifs to increase their profit margin)
- Price increases took one year to fully reflect to the customers, and persisted nearly one year after the tariffs expired.
- chicken-tax-like loopholes implemented wherever possible (for wine apparently it's raising the ABV to more than 14%)
- Importers raised the price more than needed (i.e. blame tarifs to increase their profit margin)
- Price increases took one year to fully reflect to the customers, and persisted nearly one year after the tariffs expired.
- chicken-tax-like loopholes implemented wherever possible (for wine apparently it's raising the ABV to more than 14%)
You remind me of the fact that humans do not in fact have sensors in the skin to detect specifically wetness.
I think given the amount of ideas floating around, it is occasionally good to revisit things that are "known", just in case some underlying assumption changed, especially for economics which is harder to get right as it deals a lot with what human want and do.
I think given the amount of ideas floating around, it is occasionally good to revisit things that are "known", just in case some underlying assumption changed, especially for economics which is harder to get right as it deals a lot with what human want and do.
I can't see how anyone can think "the exporters pay the tariff" makes any sense. TBH, we'll never know how many people thought it made sense because it didn't matter.
In the end money move around. If - for example - the government would just give the citizens the money from the tariffs in equal share (I mean not that I suggest they would, but technically possible), it would be like taking from the citizens that consume more and give it to the citizens that consume less.
So, yes, it is correct in a practical immediate sense that "the exporters pay the tariff" but that excludes many relevant issues like how prices evolve (which are paid by the consumers), what the government does with the money (it could share or not) and what others decide to produce (to avoid tariffs). But definitely many people didn't thought of all that ...
So, yes, it is correct in a practical immediate sense that "the exporters pay the tariff" but that excludes many relevant issues like how prices evolve (which are paid by the consumers), what the government does with the money (it could share or not) and what others decide to produce (to avoid tariffs). But definitely many people didn't thought of all that ...
Your first 2 points make me extra bitter about COVID.
Less store hours. Higher prices. Inflation. People in school got a terrible education and it affected my workforce. (But hey 1% of people died, as predicted if we did nothing at all... )
It only reinforces the importance of competition over protectionism.
I used to be a walmart fan, but my local store is cheaper now. I didn't bother to look at prices until things were getting silly.
Less store hours. Higher prices. Inflation. People in school got a terrible education and it affected my workforce. (But hey 1% of people died, as predicted if we did nothing at all... )
It only reinforces the importance of competition over protectionism.
I used to be a walmart fan, but my local store is cheaper now. I didn't bother to look at prices until things were getting silly.
> (But hey 1% of people died, as predicted if we did nothing at all... )
You're at a football stadium with 100k people. A thousand of them die suddenly. Do you feel safe?
> Less store hours. Higher prices. Inflation.
At this point, that's just greed. They figured out what the market would bear.
You're at a football stadium with 100k people. A thousand of them die suddenly. Do you feel safe?
> Less store hours. Higher prices. Inflation.
At this point, that's just greed. They figured out what the market would bear.
> But hey 1% of people died, as predicted if we did nothing at all
Nope. Compare the death rates of Sweden vs its neighbours in the Nordics (the closest comparisons we have with similar weather/culture/etc.). Or if you don't care about minimising variables, in the US between states that did lockdowns and mask mandates and those that didn't. In every comparable (e.g. excluding rural vs urban) case, there were more deaths in "doing nothing" than implementing the same basic public health axioms that have held true for centuries.
> Inflation
That was also helped by Russia invading Ukraine, which increased global prices of multiple important raw materials. But yes, inflation after a period of deflation/economic contraction/restricted travel and consumption was to be expected.
> People in school got a terrible education and it affected my workforce
It's definitely a bigger issue for them than it is for you. And yeah, it sucks for them. Would have been pretty terrible to tell teachers (who overwhelmingly skew older) they should risk their lives just to keep kids occupied too.
> It only reinforces the importance of competition over protectionism.
What has that got to do with COVID?
Nope. Compare the death rates of Sweden vs its neighbours in the Nordics (the closest comparisons we have with similar weather/culture/etc.). Or if you don't care about minimising variables, in the US between states that did lockdowns and mask mandates and those that didn't. In every comparable (e.g. excluding rural vs urban) case, there were more deaths in "doing nothing" than implementing the same basic public health axioms that have held true for centuries.
> Inflation
That was also helped by Russia invading Ukraine, which increased global prices of multiple important raw materials. But yes, inflation after a period of deflation/economic contraction/restricted travel and consumption was to be expected.
> People in school got a terrible education and it affected my workforce
It's definitely a bigger issue for them than it is for you. And yeah, it sucks for them. Would have been pretty terrible to tell teachers (who overwhelmingly skew older) they should risk their lives just to keep kids occupied too.
> It only reinforces the importance of competition over protectionism.
What has that got to do with COVID?
The thing too many forget is that if we didn't flatten the curve our entire medical system was going to collapse. It's insane that people don't yet understand this concept and can't even empathize with medical professionals. Yes, we all struggled, but try talking to medical professionals to see how they did.
When something doesn't happen because enough measures were taken, then it wasn't worth it because it didn't happen?
When something doesn't happen because enough measures were taken, then it wasn't worth it because it didn't happen?
> The thing too many forget is that if we didn't flatten the curve our entire medical system was going to collapse
Yep, if things were going well there wouldn't have been makeshift morgues with refrigerated trucks, sick people having to be moved around to different countries, the military deploying field hospitals, corpses piling in the streets. Those examples are from a variety of countries, which shows how bad the situation was globally.
Yep, if things were going well there wouldn't have been makeshift morgues with refrigerated trucks, sick people having to be moved around to different countries, the military deploying field hospitals, corpses piling in the streets. Those examples are from a variety of countries, which shows how bad the situation was globally.
> Compare the death rates of Sweden
As a New Zealander, I like to chuck out our achievement of a negative death rate. Covid lockdowns resulted in less New Zealanders dying than usual.
But, like elsewhere, economic and social harm were both high.
As a New Zealander, I like to chuck out our achievement of a negative death rate. Covid lockdowns resulted in less New Zealanders dying than usual.
But, like elsewhere, economic and social harm were both high.
You had 6 weeks of staying at home, and then quarantines for international travellers after that. In return, you had no COVID-19 at all for several years. Seems a fair trade.
> negative death rate.
Norway had that too; without lockdown. Curfews would require a change in the constitution and the last time they happened was during WWII which makes them doubly unpopular.
Norway had that too; without lockdown. Curfews would require a change in the constitution and the last time they happened was during WWII which makes them doubly unpopular.
Sweden all-cause mortality was indeed higher if an immediate pre-pandemic year is taken as a base. However, pre-pandemic years in Sweden show a substantial dip in all-cause mortality, something that neighboring countries did not see. It is not that simple.
I mean sure more people died than were necessary, but think of the shareholder value that was created!
TL;DR- consumers pay for tariffs. Duh.
As someone adjacent to the wine biz, few things worth noting:
- Their data source is a major wine importer. The economic realities of the majors versus the smaller, boutique importers, or even the larger independent ones, are very different, because of their market position, reach, their clientele, the type (mass-market) product they carry, etc... in addition to the simple financials of having padding and ability to plan long-term. Anecdotally, most of the smaller-to-mid-size importers I know have actually cut their margins, and are hanging on by a thread. For anyone smaller than the two or three very biggest players, the tariffs have been a drag on business at both ends, and for some have been existential. It's driving consolidation as well, which is never good for consumers. Imagine doing a study on the software industry and only talking to Microsoft.
- In the US we have the three tier system (producer -> importer -> distributor -> retailer) and each of those take a cut, obviously, resulting in higher costs. So those tariffs compound at each layer. There are a few exceptions where you can be a "direct import" retailer (e.g. K&L in CA) but these are a small piece of the pie. Don't even get me started on the costs of shipping, the byzantine legal compliance, etc.
- As for the 14% thing; I'm skeptical of their insinuation of causality. Relevant to this study, 2018, 2019 were exceptionally hot growing seasons in most of europe, a trend which has unfortunately continued, which naturally lead to higher ABV, even as critical trends move in the opposite direction.
As someone adjacent to the wine biz, few things worth noting:
- Their data source is a major wine importer. The economic realities of the majors versus the smaller, boutique importers, or even the larger independent ones, are very different, because of their market position, reach, their clientele, the type (mass-market) product they carry, etc... in addition to the simple financials of having padding and ability to plan long-term. Anecdotally, most of the smaller-to-mid-size importers I know have actually cut their margins, and are hanging on by a thread. For anyone smaller than the two or three very biggest players, the tariffs have been a drag on business at both ends, and for some have been existential. It's driving consolidation as well, which is never good for consumers. Imagine doing a study on the software industry and only talking to Microsoft.
- In the US we have the three tier system (producer -> importer -> distributor -> retailer) and each of those take a cut, obviously, resulting in higher costs. So those tariffs compound at each layer. There are a few exceptions where you can be a "direct import" retailer (e.g. K&L in CA) but these are a small piece of the pie. Don't even get me started on the costs of shipping, the byzantine legal compliance, etc.
- As for the 14% thing; I'm skeptical of their insinuation of causality. Relevant to this study, 2018, 2019 were exceptionally hot growing seasons in most of europe, a trend which has unfortunately continued, which naturally lead to higher ABV, even as critical trends move in the opposite direction.