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?
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). This is textbook econ 101. Substitute, profit maximization of a firm, supply and demand etc.
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.
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.
"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).
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.
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.
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.
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.
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.
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.
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.
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.
> 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!)
>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.
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.
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.
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.
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.
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.
"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%)
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 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 ...
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.
> 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.
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?
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.
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 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.
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.
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.
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). This is textbook econ 101. Substitute, profit maximization of a firm, supply and demand etc.
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"
(I've no doubt the supply chain was a mess for a hot minute, but years later?)
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.
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.
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).
At no point has the US entered deflation so far this millennium.
I also have anecdata, my grocery bill has not come down from pandemic times. Things like eggs are definitely more expensive.
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.
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.
⸻
1. Cleveland doesn’t get two bios.
So if you want a comparison in USA it needs to be something that is regulated by the US government, like hydroxacloroquine.
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.
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!)
>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...
Also the tax burden will fall on different places depending on the markets and the good in question.
Does anyone collect them?
With this study there's plenty of leads to follow. Does the ABV have an impact? What about the base price? France vs Italy?
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.
"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.
- 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%)
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.
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 ...
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.
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.
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?
When something doesn't happen because enough measures were taken, then it wasn't worth it because it didn't happen?
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 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.