Wine: The punching bag in trade retaliation. (May 2022)

• Record Type: Journal Article
• Authors: Ridley, William; Luckstead, Jeff; Devadoss, Stephen
• Is Part Of: Food policy. Volume 109(2022)
• Publication Date: 2022-05
• Subjects: F14 -- F17; Wine trade -- Collateral tariffs -- Retaliation -- Gravity; Food supply -- Periodicals; Food security -- Periodicals; Food -- Quality -- Periodicals; Food Supply -- Periodicals; Alimentation -- Périodiques; Electronic journals; 338.1905
• DOI: 10.1016/j.foodpol.2022.102250
• Languages: English
• ISSNs: 0306-9192

Abstract

Abstract: Wine is an extensively traded product that is a common target for retaliation in trade disputes. We analyze the impact of tariffs and tariff retaliation by estimating a structural gravity model of global wine trade. We then simulate the effects of tariffs and tariff retaliation, as well as the effects of trade liberalization, on trade and welfare in the international market for wine. We show that recent trade disputes threaten to reduce wine trade by nearly $340 million annually and significantly reduce consumer welfare, while complete trade liberalization would expand trade by roughly $76 million. Highlights: Wine is heavily targeted in trade wars, causing millions of dollars in trade losses. The recent US-EU trade dispute caused major collateral damage to the wine sector. Collateral effects of trade wars on unrelated sectors create economic inefficiency.