Whether this will stimulate exports from other countries and alternative products from destination countries will depend on the moderating effect of these additional taxes on global alcohol consumption to offset the positive effects of trade diversion on the consumption of non-targeted products and countries. This impact depends on the domestic share of wine imports to the United States and the share of the United States in domestic wine exports. Tariffs reduce world wine trade by 1.6%, mainly due to lower wine imports to the United States. U.S. wine exports are also declining, with U.S. consumers turning away from more expensive imported wines in favour of domestic brands. Most of this loss in the world wine trade (more than $300 million per year) is still French wine. Spain`s net export loss was $98 million, compared to $19 million in Germany. These destination countries reduce their exports to the United States by much more than these amounts, but expand their exports to other countries, increasing competition elsewhere. The macroeconomic impact of these two trade shocks and the uncertainty they have created for consumers and investors is considerable. The Brexit vote in June 2016 had an immediate impact on sterling, which continued, as its value against all currencies fell by more than 10% and UK household income and consumption growth slowed.
In addition, uncertainty about how the UK will leave the EU has reduced business investment in the UK and its trading partners (Dhingra et al. 2017, Sampson 2017, Bloom et al. 2019, Hassan et al. 2019). Similarly, the unilaterally imposed discriminatory tariffs imposed by the United States on certain imports and retaliatory measures by targeted trading partners have reduced living standards in these countries (Amiti et al. 2019, Redding et al. 2019). Global liquor markets have changed significantly in recent years as a result of globalization, income growth in emerging countries, changes in individual preferences, policy initiatives to curb socially harmful alcohol consumption and, in particular, the two trade shocks of Brexit and unilaterally imposed discriminatory tariffs by the United States. This section provides an overview of key trends and projects the potential impact of Brexit and US tariffs on the global alcohol market. He concluded that these two shocks would reduce the world`s wine trade. Even countries that are not affected by U.S. tariffs may be worse off if these tariffs sufficiently reduce global consumption.
These market developments include globalization, income growth in emerging countries, changes in preference, especially for personal health reasons, policy initiatives to reduce socially harmful alcohol consumption, and trade shocks over the past three years, such as Brexit and President Trump`s customs wars. Chart 3 Share of wine and Asia in global alcohol consumption volume, 1961-2018 (%) Results: “Free” trade agreements reduce trade barriers, increase competition, lower prices and promote alcohol consumption. However, international agreements, negotiated by free trade experts in close consultation with corporate lobbyists and without significant contributions to public health, if they are, contain important provisions that can lead to an increase in alcohol consumption and call into question the public health measures of other nations than trade restrictions.