WEBVTT - One Big Beautiful Bill, Wine Tariffs, Wearable Technology, Monetary Policy & AI 0:00:02.720 --> 0:00:07.240 Bloomberg Audio Studios, podcasts, radio news. 0:00:20.320 --> 0:00:23.400 This is Wall Street Week. I'm David Western, bringing you 0:00:23.520 --> 0:00:27.480 stories of capitalism, the wine industry, brace us for another 0:00:27.640 --> 0:00:30.640 round of tariffs on imports to the United States, Why 0:00:30.800 --> 0:00:36.000 being a domestic producer won't necessarily help, and artificial intelligence 0:00:36.040 --> 0:00:39.320 could change the fundamentals of our economy and give central 0:00:39.320 --> 0:00:43.159 banks new tools to monitor and manage it. Plus the 0:00:43.240 --> 0:00:47.279 growing business of wellness wearables and whether they really can 0:00:47.440 --> 0:00:51.400 help us live longer, healthier lives. But we start with 0:00:51.440 --> 0:00:54.880 the profound changes President Trump is bringing or promising to 0:00:54.920 --> 0:00:57.840 bring to us all from the one big, beautiful bill 0:00:58.080 --> 0:01:01.720 to more tariffs. He says, our only day, we welcome 0:01:01.760 --> 0:01:04.320 back our special contributor Larry Summers to tell us what 0:01:04.400 --> 0:01:07.080 is likely to have long lasting effects. 0:01:09.120 --> 0:01:12.199 David, it has to be recognized that it's a big 0:01:12.280 --> 0:01:17.360 legislative accomplishment. It's a larger bill passed sooner than other 0:01:17.440 --> 0:01:21.040 presidents have achieved. But I don't think it's going to 0:01:21.120 --> 0:01:24.000 take the country in the right direction. I think it's 0:01:24.080 --> 0:01:29.160 going to grow our budget deficits in the future very substantially. 0:01:29.240 --> 0:01:34.200 And you're already seeing some market reaction to that. And 0:01:34.240 --> 0:01:37.760 I think that what it does to our social safety 0:01:37.800 --> 0:01:42.680 net is really going to be devastating relative to the 0:01:42.720 --> 0:01:45.639 path the country would have been on if you look 0:01:46.160 --> 0:01:48.320 at cutbacks. 0:01:47.680 --> 0:01:49.240 In the social safety net. 0:01:49.320 --> 0:01:53.680 There were cutbacks in the welfare reform bill that was 0:01:53.760 --> 0:01:58.000 passed during Bill Clinton's presidency. There were cutbacks made by 0:01:58.400 --> 0:02:02.880 President Reagan and his original tax and budget legislation. This 0:02:02.960 --> 0:02:07.200 is the largest cutback in the social safety net that 0:02:07.480 --> 0:02:14.440 anybody has been able to find, and it's coming at 0:02:14.480 --> 0:02:18.480 a time when we appear to be on our trajectory 0:02:19.080 --> 0:02:26.320 to massive cutbacks in spending on scientific research, massive cutbacks 0:02:26.320 --> 0:02:35.040 in support for the arts and humanities, maximum cutbacks in 0:02:35.720 --> 0:02:41.480 support for foreign assistance programs, including ones on which large 0:02:41.560 --> 0:02:45.959 numbers of Aige patients in Africa are dependent for their 0:02:46.440 --> 0:02:53.880 life saving medicines. So this is legislation that, to my mind, 0:02:54.440 --> 0:02:59.080 both compromises our capacity to defend ourselves as a country 0:02:59.200 --> 0:03:04.520 because of all of the debt, and frankly compromises what 0:03:04.600 --> 0:03:08.520 makes our country worth defending in terms of being a 0:03:08.600 --> 0:03:12.399 humane force in terms of the world, in terms of 0:03:12.480 --> 0:03:18.000 our sense of national community and protecting everybody, in terms 0:03:18.120 --> 0:03:22.320 of some of our greatest contributions to humanity in both 0:03:22.360 --> 0:03:27.919 the sciences and the arts, and so I think this 0:03:28.000 --> 0:03:34.320 is a very troubling piece of legislation in ways that 0:03:34.480 --> 0:03:38.200 go beyond the problematic immediate economics. 0:03:38.560 --> 0:03:41.000 This one big, beautiful bill is one part of a 0:03:41.040 --> 0:03:44.240 more sweeping plan that President Trump has for I think 0:03:44.280 --> 0:03:47.720 it's fair to say really redoing the American economy. And 0:03:47.840 --> 0:03:50.960 yet we don't see much reaction yet from the economy 0:03:51.000 --> 0:03:52.920 in the numbers. And I'll give you an example in 0:03:53.000 --> 0:03:54.840 the tariffs. A lot of talk about tariffs, a lot 0:03:54.840 --> 0:03:57.120 of fear about tariffs, and yet if you look at 0:03:57.120 --> 0:04:00.200 the CPI numbers, the PPI numbers are coming out, they 0:04:00.240 --> 0:04:03.080 don't indicate the inflation that most economists predicted. 0:04:03.520 --> 0:04:06.320 I think it's early days. 0:04:07.280 --> 0:04:10.520 It may be that there are a set of other 0:04:10.680 --> 0:04:18.080 developments going on through artificial intelligence, through technology that are 0:04:18.600 --> 0:04:24.719 exerting a deflationary force. It may be that people, given 0:04:24.880 --> 0:04:29.440 all the huge uncertainties about tariffs, are waiting to see 0:04:29.480 --> 0:04:35.160 how it shakes out before they establish their new price structures. 0:04:35.800 --> 0:04:39.919 It may be that for a time it's possible for 0:04:40.000 --> 0:04:44.720 the people in the middle to eat the tariff increases 0:04:44.880 --> 0:04:50.320 in order to try to get market share. I agree, 0:04:50.400 --> 0:04:54.760 I agree with you, David, I would have expected more inflation, 0:04:55.040 --> 0:04:58.320 and what you have always have to do as an 0:04:58.360 --> 0:05:03.400 economist is watch the data and be prepared to change 0:05:03.400 --> 0:05:07.600 your mind. But for now, I think that I wouldn't 0:05:07.600 --> 0:05:11.160 want to rush to a judgment that these tariffs are 0:05:11.160 --> 0:05:17.120 innocuous for inflation. I think the more likely thing is 0:05:17.320 --> 0:05:20.320 that they're going to be somewhat more delayed. 0:05:21.360 --> 0:05:23.520 In their impact. 0:05:24.040 --> 0:05:29.800 Certainly, there have been many careful studies that compared the 0:05:29.839 --> 0:05:32.920 sectors that were tarifted and the sectors that were not 0:05:33.120 --> 0:05:37.640 tariffed during the president's first term and found the tariffs 0:05:37.640 --> 0:05:44.320 did translate into higher prices. So I would rather wait 0:05:44.360 --> 0:05:48.600 and see on this. I think that's the approach that 0:05:48.640 --> 0:05:53.760 the Felleral Reserve is taking, and I think, frankly that 0:05:54.000 --> 0:05:56.200 is the right approach. 0:05:56.400 --> 0:05:59.040 I mean, we've really seen a move up in the 0:05:59.080 --> 0:06:03.120 thirty year yield. We're above five percent relatively constantly. Now 0:06:03.279 --> 0:06:05.479 there are some who are concerned about exactly what that's 0:06:05.560 --> 0:06:08.800 telling us about inflation expectations and term premium. 0:06:08.880 --> 0:06:11.440 David. You know, I look at the. 0:06:13.040 --> 0:06:16.760 Ten year market relative to the twenty year or thirty 0:06:16.839 --> 0:06:22.360 year market as a sign of where the markets see 0:06:23.040 --> 0:06:26.400 very long term rates going over the very long term 0:06:26.480 --> 0:06:31.920 what market participants call the forward rate, and we now 0:06:32.040 --> 0:06:37.479 have forward rates on regular bonds that are well above 0:06:38.600 --> 0:06:44.760 five percent, and forward rates on tips on bonds linked 0:06:44.839 --> 0:06:49.200 to inflation that are well above three percent. And those 0:06:49.240 --> 0:06:55.839 are ominous indicators about our nation's credibility over the medium term. 0:06:56.240 --> 0:07:00.280 They're ominous indicators with respect to the government's ability. 0:07:00.440 --> 0:07:04.480 To issue long term debt. 0:07:04.680 --> 0:07:10.680 They're ominous indicators with respect to the deficit because if 0:07:10.720 --> 0:07:15.000 you look at the projections people quote from the Congressional 0:07:15.000 --> 0:07:19.880 Budget Office from other places, they're building in much lower 0:07:20.320 --> 0:07:24.160 interest rate assumptions. So I think if you look at 0:07:24.240 --> 0:07:28.640 what's happened to bond markets, if you look at what's 0:07:28.680 --> 0:07:32.920 happened to the dollar, you have to view our nation's 0:07:32.960 --> 0:07:40.240 fiscal situation with considerable trepidation and concern. 0:07:40.520 --> 0:07:43.560 While the government grapples with all that debt it's taking on, 0:07:43.800 --> 0:07:47.080 consumers and small businesses have their own responses to Trump 0:07:47.120 --> 0:07:50.920 administration policies, as Bank of America Chairman and CEO Brian 0:07:50.960 --> 0:07:52.920 moynihan explained. 0:07:53.240 --> 0:07:55.760 So if you look on the consumer side, and our 0:07:55.920 --> 0:07:59.320 seventy million consumers who engage with the economy every day 0:07:59.600 --> 0:08:03.000 and through their accounts and in their it's spend the 0:08:03.080 --> 0:08:06.560 cash and everything about four trillion, five trillion dollars a year. 0:08:07.160 --> 0:08:10.440 That grew up four percent plus the second quarter twenty 0:08:10.440 --> 0:08:13.000 five or the second course of twenty four. So they 0:08:13.200 --> 0:08:15.440 because they're employed and because wage growth, and that's not 0:08:15.640 --> 0:08:19.000 every single consumer, it's but in the large, in the main, 0:08:19.400 --> 0:08:22.600 they are continuing to grow and spend more and that 0:08:22.800 --> 0:08:25.600 helps the economy. And so you're seeing in some of 0:08:25.600 --> 0:08:29.320 the moderate income households there's a little bit of cheff 0:08:29.520 --> 0:08:31.800 moving around to different things. You're seeing people trade from 0:08:31.800 --> 0:08:35.480 wanting another less planes, more cruises earlier, that's leveling out now, 0:08:35.559 --> 0:08:37.680 a lot more going to movies because the movies are good. 0:08:37.920 --> 0:08:40.680 But the end of the day, they're spending discretion necessary 0:08:40.679 --> 0:08:44.040 about the same percentage they traditionally spent. They've got money 0:08:44.080 --> 0:08:46.839 in the accounts, they're employed, and the wage growth has 0:08:46.880 --> 0:08:50.120 been relatively strong, and you know, so they're pretty good shape. 0:08:50.120 --> 0:08:52.680 The credit quality is good. They have equity in their homes, 0:08:53.080 --> 0:08:56.280 they're rate financing the mortgage, so consert is pretty good. 0:08:56.280 --> 0:08:57.959 When you go to small businesses, that's more of the 0:08:58.040 --> 0:09:01.240 question small medium sized businesses, because is the interest rate 0:09:01.320 --> 0:09:04.640 environment hits them harder because they borrow on lines of 0:09:04.640 --> 0:09:07.160 credit short term for a lot of their activities, and 0:09:07.240 --> 0:09:10.559 that rate went up substantially. And anythink about the if 0:09:10.559 --> 0:09:12.600 I'm one hundred million dollar company, a fifty million dollar 0:09:12.640 --> 0:09:14.920 company here in North Carolina, and I'm engaging in the 0:09:14.920 --> 0:09:20.120 world finance, I'm importing goods and manufacturing them, further manufacturing, 0:09:20.120 --> 0:09:22.679 I'm selling them. You know, it got pretty interesting here 0:09:22.720 --> 0:09:24.559 trying to figure out all the trade and terriffs. So 0:09:24.600 --> 0:09:26.920 I think the certainly on the tax rate helps them, 0:09:27.520 --> 0:09:29.920 meaning the big beautiful bill passing and the tax rate, 0:09:30.040 --> 0:09:31.800 that's a very good thing. The alternative would have not 0:09:31.840 --> 0:09:35.400 been good if their tax rates would change. A satisfactory 0:09:35.400 --> 0:09:38.640 resolution to the trade so that they could learn the 0:09:38.679 --> 0:09:40.480 rules of the road over the next thirty sixty ninety 0:09:40.559 --> 0:09:42.960 days and get their plans for next year put together. 0:09:43.320 --> 0:09:46.120 And I think ultimately they're going We've got the satisfactory 0:09:46.120 --> 0:09:49.040 resolution on immigration and population growth. Because the end the day, 0:09:49.240 --> 0:09:52.920 when I'm hearing more from the construction companies, farming companies, 0:09:53.280 --> 0:09:56.600 and travel entertainment type companies, is I'm starting to worry 0:09:56.600 --> 0:10:01.400 about I'm starting to struggle with labor availability and that's 0:10:02.160 --> 0:10:04.079 that we got to make sure they have the workers 0:10:04.120 --> 0:10:09.199 because they will supply great service economy continue to grow up. 0:10:09.240 --> 0:10:12.280 Next, we've been hearing about those tariffs coming our way 0:10:12.360 --> 0:10:15.360 since President Trump returned to office, But where will it 0:10:15.440 --> 0:10:18.680 really affect us in our daily lives? It turns out 0:10:18.880 --> 0:10:21.440 that those of us who drink wine could be on 0:10:21.520 --> 0:10:22.400 the front lines. 0:10:23.720 --> 0:10:25.920 Where you going to find champagne? Where are you going 0:10:25.920 --> 0:10:28.600 to find shout enough to pop? Where you're going to 0:10:28.600 --> 0:10:30.720 find kyanti? You're not going to find it in Oregon 0:10:30.800 --> 0:10:37.360 or California. 0:10:41.080 --> 0:10:44.880 This is a story about bottled poetry. That's what Robert 0:10:44.960 --> 0:10:47.920 Lewis Stevenson called wine, and it's something that many of 0:10:48.000 --> 0:10:51.320 us enjoy regularly, but also something that may be a 0:10:51.360 --> 0:10:54.160 good deal harder to get a hold of if President 0:10:54.160 --> 0:10:57.199 Trump follows through with the tariff threats he's made against 0:10:57.240 --> 0:10:58.199 the European Union. 0:11:00.120 --> 0:11:03.040 We've been taking advantage for many, many years by god. 0:11:02.880 --> 0:11:06.600 Be's vote quote friend in voe, and frankly, the friends 0:11:06.640 --> 0:11:08.520 have been worse than the bos in renegages. 0:11:09.600 --> 0:11:12.560 A new deadline and a new threat. The US could 0:11:12.559 --> 0:11:15.440 impose a thirty percent tariff on imported wine from the 0:11:15.480 --> 0:11:19.320 European Union if no deal is struck by August first, 0:11:19.840 --> 0:11:21.080 we have worked. 0:11:20.720 --> 0:11:23.640 And now are ready to respond with countermeasures. 0:11:23.720 --> 0:11:25.480 It's been a mess. 0:11:26.240 --> 0:11:30.040 In New York, importer Victor Schwartz has spent nearly forty 0:11:30.160 --> 0:11:33.880 years supplying restaurants and wine shops with hand picked bottles 0:11:33.920 --> 0:11:38.800 from small European vineyards. Now tariffs threaten to upend the business. 0:11:39.440 --> 0:11:41.880 That was ten percent, and they threatened fifty percent. 0:11:42.160 --> 0:11:44.040 How different is the effect on your business of a 0:11:44.080 --> 0:11:45.040 twenty versus a ten. 0:11:45.559 --> 0:11:48.600 I mean, in our industry, end of the day, we 0:11:48.720 --> 0:11:52.840 might make five percent as a net profit, five to 0:11:52.880 --> 0:11:56.720 ten percent, So obviously we can't afford ten percent. We 0:11:56.760 --> 0:12:00.920 can't afford twenty percent. But twenty percent is really egregious. 0:12:01.720 --> 0:12:05.679 Twenty percent, I mean, think about what that does. God, 0:12:05.720 --> 0:12:08.400 you know it makes a twenty dollars wine, you know, 0:12:08.480 --> 0:12:11.160 twenty five dollars basically, because you know, there's kind of 0:12:11.160 --> 0:12:13.800 a multiplier effect as it goes through the system. You know, 0:12:13.960 --> 0:12:16.840 it's it's a much bigger impact. And don't forget when 0:12:16.880 --> 0:12:20.440 when we raise a price, it's not as if the 0:12:21.160 --> 0:12:23.280 consumer just accepts it. 0:12:23.640 --> 0:12:27.160 Where do American customers for wine go if they decide 0:12:27.160 --> 0:12:29.320 the price is too high. I'm not going to buy that. 0:12:29.880 --> 0:12:32.120 Where you're going to find champagne, where you're going to 0:12:32.160 --> 0:12:35.360 find shot enough to pop, where you're gonna find Kyanti, 0:12:35.480 --> 0:12:37.599 You're not going to find it in Oregon or California. 0:12:37.760 --> 0:12:40.960 A Finger Lakes wine, let's just be clear, is nothing 0:12:41.080 --> 0:12:45.559 like a Napa Valley wine, nothing like a wine from 0:12:45.640 --> 0:12:49.440 southern Italy or northern Italy or the center of Spain, 0:12:49.520 --> 0:12:53.480 et cetera. My gist is is that these products are 0:12:53.520 --> 0:12:57.800 so connected to their place, and that's what's wonderful and 0:12:57.840 --> 0:13:01.360 interesting about wine. Otherwise, to be the wine company of 0:13:01.400 --> 0:13:03.840 the world and it will come out of a spigot, 0:13:04.600 --> 0:13:08.880 red white rose and sparkling done right. But that's not 0:13:08.920 --> 0:13:10.880 why we love wine. 0:13:11.280 --> 0:13:15.040 And Americans do love their wine. In twenty twenty three, 0:13:15.200 --> 0:13:18.560 we consumed just under nine hundred million gallons of it, 0:13:18.920 --> 0:13:21.640 more than any other country in the world, with a 0:13:21.720 --> 0:13:25.640 value of over one hundred and seven billion dollars. More 0:13:25.679 --> 0:13:28.480 than a third of that is shipped in from abroad, 0:13:28.480 --> 0:13:32.360 making tariffs a real issue for importers, but those in 0:13:32.400 --> 0:13:35.079 the business say it's not just the imports that will 0:13:35.120 --> 0:13:40.520 be hit, it's the entire wine ecosystem. Quartan Ben Anif 0:13:40.720 --> 0:13:44.120 is president of the US Wine Trade Alliance. He has 0:13:44.120 --> 0:13:47.760 a shop in Tribeca that sells fine wine, which typically 0:13:47.800 --> 0:13:50.000 goes for over twenty dollars per bottle. 0:13:51.679 --> 0:13:54.840 Distributors and importers, even those by the way, that represent 0:13:55.120 --> 0:13:59.120 US domestic wines about seventy five percent of their revenue 0:13:59.120 --> 0:14:03.320 comes from wine. So that's one of the really interesting 0:14:03.360 --> 0:14:06.840 things about this on the tariffront, all of the major 0:14:06.880 --> 0:14:11.160 domestic wine producing organizations, from Wine Institute to NAPA Valley 0:14:11.200 --> 0:14:14.400 mint Ners to Wine America, they're all against tariffs on 0:14:14.440 --> 0:14:20.680 imported wine because they understand their domestic growers. Their producers 0:14:21.280 --> 0:14:24.640 rely on healthy wine distributors for access to market. 0:14:25.520 --> 0:14:29.480 Put another way, because state laws prevent domestic vineyards from 0:14:29.520 --> 0:14:34.280 supplying restaurants and wine shops, they need distributors, and the 0:14:34.320 --> 0:14:39.160 distributors rely critically on selling imports alongside their domestic wines. 0:14:40.000 --> 0:14:43.560 That's why those who import fine wines like Victor Schwartz, 0:14:43.720 --> 0:14:46.200 and those who sell it to US like Ben Anniff, 0:14:46.640 --> 0:14:49.800 have no doubt that tariffs will cripple their business selling 0:14:49.840 --> 0:14:53.360 both foreign and domestic wines. But there's another part of 0:14:53.400 --> 0:14:57.280 the business, the value wine business, where a bottle or 0:14:57.320 --> 0:15:02.840 its equivalent typically costs less than a LIE, and producers 0:15:02.880 --> 0:15:06.600 for this segment, like Stuart Spencer in California's Central Valley, 0:15:07.040 --> 0:15:10.560 say they need protection from multinational companies bringing in cheap, 0:15:10.920 --> 0:15:15.240 subsidized imports that force American growers out of business. 0:15:16.440 --> 0:15:18.760 There is a lot of what we call bulk wine 0:15:18.800 --> 0:15:21.840 coming in in these big twenty foot bladder containers, and 0:15:21.880 --> 0:15:24.000 it is this bulk wine that is really undercut in 0:15:24.040 --> 0:15:25.280 California grapegrowers. 0:15:26.120 --> 0:15:28.640 There's a lot of talk about the difference between free 0:15:28.640 --> 0:15:33.080 trade and fair trade. From your experience as a grower, 0:15:33.120 --> 0:15:37.120 but also from your dealing with Lodi, there are unfairnesses 0:15:37.280 --> 0:15:39.040 in some of the exports to the United States. 0:15:40.080 --> 0:15:42.600 I mean it's a completely unfair market. I mean we 0:15:42.640 --> 0:15:46.400 are competing in a global marketplace. The European Union spends 0:15:46.440 --> 0:15:49.240 you know, over two billion year between EU money and 0:15:49.880 --> 0:15:53.960 member state money propping up their wine sector. They are 0:15:54.000 --> 0:15:58.240 not only paying growers to inventnors to distill access wine 0:15:58.280 --> 0:15:59.920 and buy it up, but they're also paying them to 0:16:00.040 --> 0:16:02.760 plant new vineyards. And they spend hundreds of millions of 0:16:02.760 --> 0:16:05.200 dollars in market promotion all around the world. And the 0:16:05.280 --> 0:16:08.320 US is the number one target market. They also have 0:16:08.440 --> 0:16:11.520 trade barriers, so it gets really complex when you get 0:16:11.560 --> 0:16:13.360 in the weeds. But we are not playing on a 0:16:13.440 --> 0:16:14.320 level field. 0:16:14.560 --> 0:16:18.360 Last year, California wineries, which make nearly ninety percent of 0:16:18.440 --> 0:16:21.800 US wine, we're stuck with more than five hundred thousand 0:16:21.920 --> 0:16:26.200 excess tons of grapes. Now seventy seven million gallons of 0:16:26.240 --> 0:16:28.800 wine are sitting in storage tanks. 0:16:28.520 --> 0:16:30.400 And you can still see some of the grapes on 0:16:30.480 --> 0:16:33.720 the vines. We have thousands of acres of grapes that 0:16:33.760 --> 0:16:36.840 are being torn out right now, and we have small 0:16:36.880 --> 0:16:39.600 farms and family businesses that are up for sale because 0:16:39.640 --> 0:16:43.400 there's just not a prospect for them moving forward. My 0:16:43.480 --> 0:16:45.320 family's been in this for fifty years, and I talked 0:16:45.320 --> 0:16:47.640 to old timers that been in it for multi generations, 0:16:47.640 --> 0:16:49.800 and they've never seen it as challenging as we are. 0:16:49.920 --> 0:16:50.160 Now. 0:16:50.760 --> 0:16:53.120 Seventy percent of all wine sales in this country is 0:16:53.160 --> 0:16:56.280 controlled by about a handful of five to six large 0:16:56.360 --> 0:17:00.960 multinational companies. They're bringing wine in bulk, blending it in 0:17:01.000 --> 0:17:04.320 with California wine up to twenty five percent and calling 0:17:04.359 --> 0:17:08.440 American appellation it's a federal loophole. We have, you know, 0:17:08.880 --> 0:17:11.679 millions of gallons filled up in tanks right now in 0:17:11.680 --> 0:17:15.000 California that don't have a home. But simultaneously, twenty four 0:17:15.000 --> 0:17:18.119 million gallons of bulk wine is poured into California, coming 0:17:18.160 --> 0:17:21.399 in at super low prices and undercutting the California grapegrower. 0:17:21.880 --> 0:17:24.800 Are you in favor of the tariffs the President Trump 0:17:24.840 --> 0:17:25.919 is talking about. 0:17:25.720 --> 0:17:27.959 Well, I think if I was to speak to our 0:17:28.080 --> 0:17:30.880 seven hundred grape growers that I represent, I think many 0:17:30.880 --> 0:17:33.240 of them would support the tariffs to help level the 0:17:33.280 --> 0:17:35.960 playing field. And I think what we would really hope 0:17:36.080 --> 0:17:39.040 is that would bring these other trading partners to the 0:17:39.080 --> 0:17:42.480 table to negotiate fair trade. The challenge we see with 0:17:42.520 --> 0:17:44.760 what's going on with a lot of the trade negotiations 0:17:44.800 --> 0:17:47.360 now is wine is just upon in a larger story 0:17:47.680 --> 0:17:50.160 and the issues are about bigger issues. But I think 0:17:50.240 --> 0:17:52.639 none of us, you know, want to see tariffs in 0:17:52.800 --> 0:17:55.360 place permanently. I think what we really want to see 0:17:55.440 --> 0:17:56.800 is really free and fair trade. 0:17:57.960 --> 0:18:02.920 Some domestic producers kicking californ or complain about unfairness from 0:18:03.040 --> 0:18:08.480 Europe because there are subsidies given to vineyards over in Europe. 0:18:09.119 --> 0:18:11.320 Are tariff's an effective way to deal with that problem? 0:18:11.680 --> 0:18:14.240 I feel really, really really bad for those guys. But 0:18:14.400 --> 0:18:16.560 a tariff is not going to solve their problem. Farmers 0:18:16.600 --> 0:18:19.920 that grow grapes to sell until, for instance, grocery store 0:18:19.960 --> 0:18:24.000 boxed wine, and that's terrific for them. It's a great 0:18:24.000 --> 0:18:28.040 product for certain customers. The demand for those products is collapsing. 0:18:28.560 --> 0:18:31.239 You know, people aren't buying bulk wine the way they 0:18:31.280 --> 0:18:31.520 used to. 0:18:33.840 --> 0:18:37.000 Whether tariffs could give some relief to bulk wine producers 0:18:37.119 --> 0:18:40.600 or not, they certainly would have unintended effects on the 0:18:40.640 --> 0:18:44.440 American economy overall. You have spent some of your time 0:18:44.480 --> 0:18:48.960 down in Washington trying to explain to lawmakers policymakers exactly 0:18:48.960 --> 0:18:52.280 what this would mean for the wine business. What would 0:18:52.359 --> 0:18:54.720 you want them to understand that maybe they don't understand 0:18:54.800 --> 0:18:57.200 right now about the business and the effects of tariffs. 0:18:57.480 --> 0:19:01.000 The United States has been talking about their concerns with 0:19:01.040 --> 0:19:04.960 respect to a trade deficit. We import more European wines 0:19:05.080 --> 0:19:07.879 than we sell American wines Europe. But the reality is 0:19:08.080 --> 0:19:11.879 we have a huge economic surplus on the sale of 0:19:11.920 --> 0:19:15.119 European wines in the United States. You know, we import 0:19:15.160 --> 0:19:18.400 about five point three billion dollars worth of wine from 0:19:18.400 --> 0:19:23.159 the European Union into the United States. But American businesses 0:19:23.240 --> 0:19:27.560 make almost twenty three billion dollars from the sale of 0:19:27.560 --> 0:19:31.920 those products, making a big margin on wine. For a restaurant, 0:19:31.960 --> 0:19:35.760 it is not a luxury, it is an absolute necessity 0:19:35.920 --> 0:19:37.520 for their very survival. 0:19:37.760 --> 0:19:41.439 If in fact, tariff's do get imposed, what are the 0:19:41.920 --> 0:19:44.439 likely long term effects in the wine business? 0:19:44.560 --> 0:19:48.879 Contraction? And then you know what that means. Contraction means 0:19:49.920 --> 0:19:53.280 American businesses closing and firing all their employees. 0:19:53.480 --> 0:19:56.800 What about the uncertainty itself quite apart from the tariffs. 0:19:57.040 --> 0:19:59.800 I mean, I'll tell you I had phone calls from 0:20:00.320 --> 0:20:03.800 you know, wine distributors who said, you know, my grandfather 0:20:03.960 --> 0:20:07.920 started this business. We were in terrific shape and growing 0:20:07.960 --> 0:20:11.800 and hiring in January, and now I might have to 0:20:11.840 --> 0:20:14.719 decide if I'm going to close the doors in two weeks. 0:20:15.080 --> 0:20:18.360 You know, when they're they're put into this position when 0:20:18.359 --> 0:20:21.159 their choice is either to pay a tariff that they 0:20:21.160 --> 0:20:25.040 cannot afford because these these are small businesses, or don't 0:20:25.040 --> 0:20:28.080 bring in wine. Don't bring in the wine that represents 0:20:28.600 --> 0:20:31.040 seventy five percent of the revenue for your next three 0:20:31.119 --> 0:20:33.440 or six months. You know, we had restaurants from South 0:20:33.440 --> 0:20:37.520 Florida say, in the summertime, we need sancer and rose. 0:20:37.920 --> 0:20:41.280 That's what keeps our businesses alive. And there really is 0:20:41.920 --> 0:20:44.080 no substitute for these products. 0:20:43.840 --> 0:20:45.160 And one of our favorite. 0:20:45.760 --> 0:20:49.199 So in your wine store you have Bordeaux. If you 0:20:49.240 --> 0:20:52.120 can't get the Bordeaux, will the customer say that's okay, 0:20:52.160 --> 0:20:52.880 I'll take the cab. 0:20:53.280 --> 0:20:54.400 The answer, flat lay is. 0:20:54.359 --> 0:20:56.520 Now we talk about terror. 0:20:56.560 --> 0:20:56.760 War. 0:20:57.480 --> 0:20:59.879 It's a word that gets bandied about. It sounds fan 0:21:00.000 --> 0:21:02.359 and see it's forign, but it really well, it means 0:21:02.680 --> 0:21:05.920 terrowar land terror and it just means the place, right, 0:21:05.960 --> 0:21:10.680 it's just geography. Part of terrawar is the human element, 0:21:10.960 --> 0:21:14.160 the culture, the civilization, the people, the people who've been 0:21:14.320 --> 0:21:19.040 on this piece of land in southern Italy for multiple generations. 0:21:19.240 --> 0:21:22.359 They cook certain kinds of food, they make certain kinds 0:21:22.400 --> 0:21:25.960 of wine that go with those foods. And it's very specific, right, 0:21:26.240 --> 0:21:28.960 I mean, don't you love to drink an Italian wine 0:21:28.960 --> 0:21:31.199 when you're having your spaghetti and meat sauce. 0:21:32.160 --> 0:21:35.040 Schwartz is trying to hold off the administration as the 0:21:35.119 --> 0:21:38.760 lead plaintiff in a lawsuit challenging the tariffs. The US 0:21:38.840 --> 0:21:42.119 Court of International Trade ruled in his favor, but the 0:21:42.160 --> 0:21:45.280 appeals Court stayed the injunction to give itself time to 0:21:45.320 --> 0:21:49.280 hear the case. If the tariff's going to effect four 0:21:49.440 --> 0:21:54.040 European wines August one, how long will it take before 0:21:54.119 --> 0:21:55.320 we see it in our lives. 0:21:56.440 --> 0:21:58.879 I think you'll start to see it pretty quickly. You know, 0:22:00.320 --> 0:22:03.919 the first tariffed wines only have only now started to 0:22:03.960 --> 0:22:07.600 come in, so distributors have still been selling through some 0:22:07.880 --> 0:22:09.880 wines that didn't have tariffs on them. You're gonna start 0:22:09.880 --> 0:22:12.119 seeing those prices come now. You're gonna start seeing a 0:22:12.160 --> 0:22:14.800 lot less choice. You know, there are importers and distributors 0:22:14.880 --> 0:22:17.320 that have halted all of their shipments because they're not 0:22:17.320 --> 0:22:19.280 sure they can afford to bring them in now. At 0:22:19.320 --> 0:22:22.760 the same time, they have no substitutes for them. They're 0:22:22.760 --> 0:22:25.920 not buying more domestic wine, for instance, they can't afford 0:22:25.960 --> 0:22:28.280 to they need to sell these European wines in order 0:22:28.280 --> 0:22:31.600 to buy more American wine. In a nutshell, American businesses 0:22:31.760 --> 0:22:34.879 are incredibly good at selling European wine and they support 0:22:35.000 --> 0:22:36.840 huge numbers of jobs in the United States. So some 0:22:36.920 --> 0:22:39.520 of the most famous importers actually got into the business 0:22:39.840 --> 0:22:42.920 because they were in France or Italy during World War two, 0:22:42.960 --> 0:22:45.080 said oh my god, I love this. This is what 0:22:45.160 --> 0:22:47.920 I do want to do with my life, and their 0:22:47.960 --> 0:22:51.920 classic American entrepreneurial success stories. As a matter of fact, 0:22:52.040 --> 0:22:54.719 many of the most famous European wines in the world. 0:22:55.240 --> 0:23:00.800 They're famous today because they were discovered by American wine 0:22:59.840 --> 0:23:03.639 and they were brought back. They tasted ten thousand wines, 0:23:03.680 --> 0:23:05.720 said these three are the best, and they were right. 0:23:06.040 --> 0:23:07.879 Funny story. One of the first guys to do that, 0:23:07.880 --> 0:23:09.879 by the way, was Thomas Jefferson. You know, he went 0:23:09.920 --> 0:23:13.320 to Burgundy. He bought Mohersche and Mahrsokudor for he and 0:23:13.359 --> 0:23:15.760 George Washington. He bought Chateau de Kem for he and 0:23:15.760 --> 0:23:17.680 George Washington, and today those are still some of the 0:23:17.720 --> 0:23:20.040 greatest wines on the planet. He had a pretty good paltte, 0:23:20.040 --> 0:23:20.280 I think. 0:23:21.000 --> 0:23:25.840 And now, ironically American's affinity for European wines, nurtured by 0:23:25.840 --> 0:23:29.440 the likes of George Washington and Thomas Jefferson, may be 0:23:29.640 --> 0:23:33.359 challenged by the most recent occupant of their high office 0:23:34.200 --> 0:23:36.679 and perhaps make it more difficult for us to enjoy 0:23:36.720 --> 0:23:40.640 that bottled poetry they discovered two hundred and fifty years 0:23:40.640 --> 0:23:48.639 ago in Fine French wines up next. From our wrists 0:23:48.720 --> 0:23:51.840 to our fingers, everyone seems to be wearing some device 0:23:51.920 --> 0:23:55.240 to monitor how healthy our habits are. We visit the 0:23:55.320 --> 0:24:10.160 wonderful world of Whoop to see what's really possible. This 0:24:10.280 --> 0:24:13.879