PORTLAND, Maine — On Tuesday, Ned Swain traveled from Portland to Washington, D.C., to deliver testimony that he hoped would save his small business.
Swain runs Devenish Wines, a Maine-based wine distribution company that stocks restaurants and wine shops from Portland to Mount Desert Island and Down East. He’s one of many Mainers who have spent decades making a life in Maine’s hospitality, tourism and restaurant industries who fear a new proposal for 100 percent tariffs on European wine, cheese, olives and other agricultural goods that would “devastate” their business.
“There are a lot of people quoting figures saying that a number of warehouse workers, logistics workers and people who work for trucking companies will lose their jobs,” Swain said. “I wanted to show up in Washington and say, ‘Hey, I’m not from Manhattan or San Francisco. I work in a warehouse, and this will shrink my business.’”
The U.S. trade representative has proposed dramatic new tariffs on wine, cheese and other agricultural products from the European Union that would essentially double the price of those goods on the shelves — if they made it to the states at all.
The 100 percent import tax would apply to an expanded list of goods including wine and cheese from a broader range of regions as well as items such as Irish whiskey, olives and olive oil, dairy products including yogurt and butter, some preserved fruits and nuts, and tools such as axes, pliers and bolt cutters.
A letter from Maine’s congressional delegation expressing concern over the tariffs was sent to U.S. Trade Representative Robert Lighthizer on Wednesday. Signed by Sens. Susan Collins and Angus King and Reps. Chellie Pingree and Jared Golden, the letter urged the trade ambassador to “strive quickly for a solution that protects U.S. industry and jobs.”
The World Trade Organization ruled last year that the U.S. could impose $7.5 billion in tariffs on European goods, a result of a dispute that European Union countries gave disproportionate subsidies to aircraft manufacturer Airbus. Rather than slapping the import tax on automobiles, pharmaceuticals, armaments or other European imports, U.S. trade representatives stuck them onto European agricultural products.
A 25 percent targeted tariff levied on some European wines — mostly French and German — and other agricultural products went into effect Oct. 18. Maine retailers and restaurants said they were able to brace themselves for that, spreading cost increases throughout the supply chain.
But in December, Lighthizer expanded the list, calling for a 100 percent tariff in response to a 3 percent digital services tax on large internet companies such as Google, Amazon and Facebook, which President Donald Trump and his trade officials have called “discriminatory.”
Those putative measures are currently being discussed by trade officials, and could go into effect as early as Jan. 15.
According to the Maine International Trade Center, the state imported $769 million of goods and services from the European Union in 2018 and exported nearly $370 million.
The tariffs are tied to the Trump administration’s ongoing trade wars, as well as the president’s opposition to the authority of the World Trade Organization’s governing body, which have produced a wave of volatility in international trade deals.
That volatility could have a direct effect on the state.
Greg Dugal of HospitalityMaine, a restaurant industry advocacy group, said that Maine has given a lot more dual licenses to business owners who operate a restaurant while also selling food, wine and beer retail. He said the tariffs would affect the wholesaler all the way down to different types of retailers.
Dugal also feared the trade war could get even worse.
“I’m not an economist, and I’m not the president, but all I know is that when you put a tariff on someone they usually turn around and put one on you,” Dugal said.
Swain estimates that Devenish Wines, which employs 13, would shrink by 40 or 45 percent. And it’s easy to project losses throughout the restaurant industry as well.
“A 100 percent tariff would put Maine and Loire out of business,” Peter Hale said of his wine retail shop on Washington Avenue in Portland. “And it would change the heart and soul of Drifters Wife” — the new American restaurant he and his wife Orenda opened in 2014.
Hale said the same could be said of everyone they work with in the industry.
Such a heavy tax on America’s dining scene would ultimately affect the workers of America, said Orenda Hale, who argued that this sector of the agricultural industry does not have high-ranking lobbyists like other industries.
“I think it could be devastating,” said Scott Worcester of Sawyer Specialties, a gourmet foods shop on Mount Desert Island. Worcester has owned the store for 25 years and employs five people. European wine sales make up a significant part of business.
Worcester said it’s not as simple as pivoting to wines made in the U.S. and South America.
“They’re not interchangeable,” Worcester said. “It won’t significantly increase domestic wine sales. Most of the domestic wines being produced right now can’t fill the gap, and all the wines being produced in this country are already being sold.”
California does not produce enough extra wine to cover this demand, Swain said, and such a run on American wines would quickly produce a domestic shortage. Vendors such as Devenish would not be able to replace the lost volume.
Swain believes impacts would be felt throughout the chain of service, he said, including tipped employees at restaurants.
“If a server sells a $60 bottle of wine, maybe they get 20 percent of that value in tip,” Swain said. “But if wines from the EU double in price and they can’t sell wine anymore, then they’re going to have a significantly smaller tip at the end of the night.”
“Any price increase, let alone a 100 percent tariff, would be devastating to that market,” said Paul Chartrand, who opened the wholesale wine importing company Chartrand Imports in Rockland 35 years ago.
Chartrand says the industry has never faced a bigger threat.
“If it does take effect, a lot of people who aren’t directly impacted by being in the business are going to see things that they enjoy in daily life get more expensive than they can afford,” Chartrand said. “Especially in our huge tourism industry.”
The Office of the U.S. Trade Representative is taking public comment until Jan. 14 and could implement the tariffs the next day.