16 November 28 - December 4, 2024 dallasobserver.com DALLAS OBSERVER Classified | MusiC | dish | Culture | unfair Park | Contents politics, says a 20% tariff would absolutely crush the already slim margins in the res- taurant business. “There really is no room for higher costs — food or booze — and many places can’t af- ford to raise prices because customers will simply opt out,” they said. There’s also a shift in alcohol consump- tion over the last few years, which makes it harder for restaurants to make a profit, they add. People are drinking less and spending less on what they buy. Tariffs would exacer- bate that trend. Swap One Sip for the Other If tariffs are placed on foreign wines, won’t restaurants and drinkers just buy more American wine, meaning more money for American businesses? Aneff says it’s not that simple. The liquor indus- try is propped up by a three-tiered system that includes importers and distributors who rely on large volumes to transport bottles across the country. If a part of that network dries up, the economies of scale are knocked off kilter, raising prices. “They [foreign wineries] have to sell their wine to a U.S.-owned importer,” An- eff says, “And that U.S.-owned importer sells it to a U.S.-owned distribution com- pany, and that U.S.-owned distribution company sells it to restaurants and retail- ers. Almost all of that chain is made up of American businesses.” Umit Gurun, a professor at the Jindal School of Management at UT Dallas, says high-end restaurants and bars where clients aren’t so price-sensitive might not have a hard time with a 5% increase in a glass of wine. Given what we saw when tariffs were placed on booze in the previous Trump ad- ministration, is it a fair expectation that a night out will cost more? Gurun says yes, pointing out that it depends on multiple fac- tors, including how high the tariffs are and whether the businesses can absorb the costs or will be forced to pass them along to con- sumers. The long-term impact, he says, will be predicated on how long trade tensions and tariffs remain in place “It’ll be interesting,” Gurun says. “The next couple of years we will see. There’s some expectation that, based on the past, we’re going to see similar sort of effects on all aspects of economic life.” The Atlantic took a deep dive into more of those economic aspects of tariffs and how mass deportations could affect food prices. “The immigration and tariff policies, in other words, would affect all the food we eat: snacks, school lunches, lattes, pet food, fast food, fancy restaurant dinners,” writes The Atlantic journalist Ellen Cushing. “Peo- ple will not stop eating if food gets more ex- pensive; they will just spend more of their money on it.” Cushing asked Rachel Friedberg, an eco- nomics lecturer at Brown University, if there were any scenario under which the new ad- ministration’s policies don’t force prices up: “No,” she said, without pausing. “I am ex- tremely confident that food will get more ex- pensive. Buy those frozen vegetables now.” Might want to pick up a few bottles of your favorite Bordeaux as well. City of Ate from p15 ALWAYS IN YOUR FEED. CHOOSE YOUR CHANNEL
