Wine: The punching bag in trade retaliation

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.

Automated summary

This article analyzes the impact of tariffs and tariff retaliation on the global wine market using a structural gravity model. It simulates the effects of trade liberalization, as well as the effects of tariffs and retaliation, on trade and welfare in the international wine market. The results demonstrate that recent trade disputes pose a threat to wine trade and consumer welfare, while trade liberalization has the potential to expand trade.