The Trouble with Tribbles, if you remember your Star Trek history, is that they are adorable. People fall in love with the fuzzy little creatures. But Tribbles multiply like crazy, and pretty soon the place is overrun with them.
Tariffs are not very much like Tribbles, to be honest, but they do have a few things in common right now. First, some people are really in love with tariffs to the point where just saying the word seems to make them feel good.
But, a bit like Tribbles, tariffs tend to multiply both because one tariff often calls for another (did you see the Liberation Day list of tariffs that included some countries that barely exist?) and because of tit-for-tat responses. Tariffs beget tariffs, and pretty soon things can get out of control.
Get Specific!
Tariffs are also like Tribbles in that they really gum up the works and make the economic system less efficient in both creating jobs and meeting consumer needs. To see this, suppose that the government has a specific goal, such as to create jobs in the auto industry. It may or may not be a good idea for government to step in here because anything it does will introduce a distortion. But assume there is a good case for intervention. What’s the best approach?
As an economist, I favor something I call the “specificity rule,” which holds that the best policy is the one that most specifically targets the problem and so introduces the fewest distortions into the system. In the auto worker case, training programs to develop skills and specific investment incentives would make sense. Stimulus to purchase new autos would help, but would be less efficient because they would subsidize existing jobs as well as any new ones created. A tariff on imported cars would create additional unnecessary inefficiencies as well as shrink the car market overall by raising prices. That’s bad. A tariff on all imported products would depress overall demand and do little for the auto workers.
I hope the specificity rule makes sense. Specific solutions are often slower to implement and often require targeted expenditures, but are better in terms of losses in efficiency, growth, and consumer benefits. All policies have a cost that’s either paid through taxes to fund programs or higher costs and prices (or sometimes both) on producers and consumers. Keeping the total cost low and distortions minimized while achieving results is the goal.
Uneven Field
What does this have to do with wine? Well, the global wine industry is in a slump right now, and winegrowers around the world are suffering with low prices, reduced demand, and acres and acres of surplus fruit. Because wine is an important industry in many countries, governments are supplying aid in order to stabilize agricultural incomes, facilitate adjustment to different land uses, and promote wine sales, especially in export markets.
You can argue whether this aid is a good idea or not, but much of it (especially the adjustment assistance) more or less adheres to the specificity rule. The policies are focused on the intended results.
Wine is an important industry here in the United States, too, but government policies to stabilize, adjust, and promote are much less forthcoming here, which creates, as many have noted, an uneven playing field for U.S. wine and winegrape growing. To a certain extent, U.S. growers bear a part of the burden of foreign adjustment. They would be justified in seeking similar specific assistance to better balance competitive forces.
Darn Tribbles!
Enter the Tariff Tribble. The chances of securing the targeted aid that American winegrape growers need seem very low in the current environment. (Indeed, this applies to agriculture generally, much of which has already been harmed by foreign reaction to American tariffs.) If more effective, specific assistance is not available, then it is understandable that some in the wine industry would turn to embrace tariffs.
But tariffs are the wrong solution to the problem because they cause collateral damage, invite retaliation, and, by raising prices, act to shrink the wine market and squeeze distribution generally.
Darn Tribbles. So lovable. But they can love you to death if you are not careful.
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Can’t resist including a scene from the original Star Trek episolde. Reminds me of how much tariffs and Tribbles have in common!
“Wine and the Age of Uncertainty” was the title of my remarks at the State of the Industry session at this year’s Unified Wine & Grape Symposium (
Several European producers asked if the tariffs were benefiting U.S. wine producers. That’s a natural question if you think about tariffs and trade as a zero-sum game, where my loss is your gain. But in fact wine seems to be a negative-sum game at the moment as the global industry adjusts to a new normal. Demographic shifts do not favor alcoholic beverages generally. Neither do health concerns.
Some say that economics is the “science of unintended consequences” and a recent 
When David Ricardo wanted to make the logic of his famous Theory of Comparative Advantage crystal clear he knew what example to choose: wine. It was obvious that Britain should import wine from Portugal in exchange for cloth rather than trying for vinous self-sufficiency. Any fool could see that!
My remarks at the 
