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Episode 213: What's Next for the Wine Importer Who Took Down the Trump Tariffs at the Supreme Court?

45m 15s

Episode 213: What's Next for the Wine Importer Who Took Down the Trump Tariffs at the Supreme Court?

In this podcast episode, Wine Enthusiasm Digital Director Sarah Ventira interviews Victor Schwartz about the aftermath of the Trump administration’s “Liberation Day” tariffs and his successful Supreme Court lawsuit. Schwartz explains that the initial tariffs, imposed under the International Emergency Economic Powers Act (IEPA), were ruled illegal in a 6-3 decision because the act was never intended for tariffs, which belong under congressional authority. The administration quickly replaced them with narrower tariffs under a different statute, limited to 10% (set to rise to 15%) and requiring renewal every 150 days by Congress. Schwartz details the chaos tariffs caused, including instability that crippled business planning, increased costs for imported goods like wine, and ripple effects throughout the supply chain—from glass and cork imports to domestic wineries losing Canadian markets due to boycotts. His own company paid six-figure sums in tariffs, forcing contraction, discounting, and reduced risk-taking, though staffing was preserved. Reimbursements for illegal tariffs are progressing, with the Court of International Trade pushing Customs and Border Protection to develop a repayment plan. Schwartz emphasizes that refunds will go to suppliers who supported his business during the crisis, not as profit, and underscores that tariffs remain anti-business, damaging the U.S. economy despite claims of protectionism.

Transcription

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English
[MUSIC] Hello, and welcome to the Wine Enthusiasm Podcast. You're serving of drinks, culture, and the people who drive it. I'm Sarah Ventira, Digital Director here at Wine Enthusiasm. It's been just over one year since the Trump Administration held what it referred to as Liberation Day. The announcement of sweeping tariffs from over 60 countries in what they claimed was an effort to protect US manufacturers and boost domestic industry. Those 10% tariffs, and in some cases much higher, so chaos throughout the business world. But the already struggling inherently international wine industry would be hit especially hard. Almost immediately, Victor Schwartz, founder of New York-based Wine Enthusiasm in Porter, VOS selections, stepped up to the plate to file suit. With the help of Elias Somin of the Cato Institute, attorneys from the Liberty Justice Center and four other small businesses, Schwartz took on the role as lead plaintiff in a lawsuit that wound its way all the way up to the Supreme Court. After nearly a year of legal wrangling, in late February, Schwartz and his team won. In a 6-3 ruling, the Justice has said that Trump lacked the authority to impose broad import taxes under the International Emergency Economic Powers Act, Aepa, which the Administration used to side-step Congress in the decision. The court deemed the tariffs illegal and economically harmful and thrust Schwartz into the international spotlight. So now that the hubbub has slightly died down and were just past the year mark of the official announcement, we decided it was time to check in with Schwartz on the current state of tariffs and what it was like going to the Supreme Court. Listen in to learn more. I'm just going to jump right in now, Victor. Where are we at with the tariffs currently? That's a good question. This Administration is hell bent on tariffs. There's a strange attitude where it's almost like this kind of schoolmarmish mentality. It's like, you think you got away with those tariffs? We're going to got new ones for you. So there, Dorothy, you know, there's a very odd attitude. Usually you think of governments in this country, especially Republican governments to be so pro business. But we all know tariffs are anti-business. So where we are. All right, we beat IEPA and that was really, really important because these were across the board. They were random and you saw the way they were instituted. They were all over the place. It was chaos. The day we won at the Supreme Court on February 20th, IEPA was knocked down for the absolutely illegal use of that statute for tariffs that it was. The Administration immediately found another way to put on tariffs. I'm not going to get into the details. I think it's number 122. But the fact is they were allowed to do up to 15%. They seem to make an error and think they can only do 10%. So that's what they put on 10%. So the Administration's of laxity is went to our favor. So they're right now. They're sitting at 10%. They will go to 15% as promised. We will see what happens. These tariffs were only can be by law instituted for 150 days and then they have to be renewed. They're narrower in the way they're put on and more limited in time and scope is the idea. They can't just be like, you know, I don't like that blue dress you wearing today. We're going to give you 35% and oh, you're a nice friend. You just gave some money to my whatever campaign or something to a cause that I like. I'm going to give you 12%. It's not like that at all. These are very specific. And when the renewal has to go through Congress. To me, at least, that was the big goal of this lawsuit because this all belongs in Congress. The power to tax is with Congress. So that's in a nutshell where we are with tariffs today. They are continuing, but they're more limited in scope and they're more their boundaries on them. And is that what made the previous tariffs like what exactly made the previous tariffs illegal according to the Supreme Court? Oh, well, they use something called IEPA. That's an acronym for the International Emergency Economic Powers Act. It was instituted in 1977 for some very specific rules, which I will not bore you with, but it all came out of the Nixon administration when we went off the gold standard. That sounds like ancient history, but that's what that was all about. And it was not about tariffs. It was about balance of payments issues come because of that very thing. IEPA, as we call it, was never intended for tariffs. The word tariff never shows up in IEPA. So it was never intended for that. But it was a nice, easy backdoor way where the administration thought just to do whatever the heck they wanted on any given day to any given country on the planet. And then change it. And that was the problem. I mean, the big part of the problem was the uncertainty. The things just kept changing. As we saw, business cannot do its business in an unstable environment. I mean, that's always been the magic of America. That's why everybody wanted to do business with America. This was the stable country. This is the country you can depend upon. This is a country of laws. A lot of those things kind of vanished with this whole tariff thing. And that's why the tariff case was so much more important than just a very specific issue. This particular taxation. It was a much bigger issue. And so, I mean, obviously it impacted all sorts of businesses, you know, like what's the board? Yeah, cars, even if you're in an importer, you're still going to buy something. We live in a global economy. Come on. And not to mention the whole diminimus thing. They got rid of how many people buy products that, you know, diminimus, but that is. No, can you explain that? Oh, it's very important. So you could bring products into this country without any tariffs, any taxes or anything. I think the maximum was $800. So consumers were buying all kinds of little things, or they would bring them back into the country with them when they travel. And it was under $800. They didn't pay tax on it. There was a lot of trade going on, especially with China. People buying all kinds of things and they were coming from other countries, but it fell under diminimus. So there was no, no charge. And that's when you may have heard it. I certainly started hearing it from friends where they say, yeah, like I came back from Italy with like, you know, this $80 scarf. And they started charging me like a tax on it when I got what I arrived here is like, that's weird. I've been traveling to Italy for like 40 years. So yeah, that kind of thing was happening too. Oh my gosh. I'm glad that I did not get caught, can bring anything in through. You're hiding in your suitcase. The only thing I, the only thing I bring in is like, you know, Guantali and things like that. You're not supposed to have whatever. But in my socks, but no, I, you know, I've never seen that. But yeah, that's what's going on. Oh my gosh. Well, hopefully you're having gotten flagged by the Briegel brigade for the Guantali. I'm traveling for a while. So it's, it has an effect to me. But yeah. So it's all across the board. Like I said, we live in a globalized economy. Even if my particular company does not do importation, I very likely I'm buying something that came from another country. That input is increasing. I mean, here's the best examples. Let's bring it right back on home. Wine people think, Oh, domestic wine sales are going to boom domestic wine. Or is there not impacted? Excuse me. Have you heard of corks? Have you heard of glass? Have you heard of all the incredibly expensive and specific equipment, which is only made overseas? Have you heard of barrels? What's I'm mentioning the disruption to the whole ecosystem of distribution, which we can talk about. Yeah, we did a story a while ago about the boycotts against American made products and you know, like Canada, obviously very swift, very upset, understandable. And as one of our largest markets, it really impacted vintners. I actually have personal emails after that story published of like wine makers who were like, thank you for bringing attention to this. Completely decimated like two decades worth of work. I heard from wineries that they for whatever reason, small wineries and they ended up doing like 80% of their business with Canada. God overnight. Yeah. Not to mention wineries that are looking for distribution in America within the national distribution system. And then their distributor in whatever place in Houston, Texas or Chicago, Illinois and saying, sorry, I have no money to buy more of your products. I'm paying tariffs. I have no money to expand my portfolio of domestic products. I have no money. 15% we're paying, let's say from Europe, that's a big chunk of it, right? 15% that's a lot of cash flow. People have to appreciate what an impact that is and companies like mine, small businesses, which mostly a lot of distributors are. Where are they going to get that extra 15%? just go to like they're not going to Wall Street to get that money and their bank's not going to give it to them. So what do you do? You're going to contract. This has been the big contraction. Yeah. So I mean, speaking of which like how did this impact your business specifically? We paid a lot of money, you know, whatever six, seven, whatever, six to an half figures, whatever, big numbers, you know, where that money come from. We had a squeeze, we had a discount products, put things on sale, find things that were that were moving more slowly, cut down on skews, reduce our inventory numbers, what we were carrying, contraction contraction contraction, contraction contraction, our appetite for risk diminished to zero. All we could think about was paying tariffs. That was our focus. That's been our focus. The sales are focused. We have to pay tariffs. What could be more important? And did it impact staffing or any of those aspects of the business? No, we squeezed through on staffing just as we did during the pandemic. But a lot of larger companies, they found a lot of room. You know, we run pretty lean, but you know, when you got, you know, seven layers of management and, you know, whatever, thousand reps on the ground, you can find places to cut. Yeah. And it happened, of course. And the mark, and we all know that people are drinking less alcohol. So the market is not great on top of that. Yeah, it's a lot of factor is kind of building a not great situation into an even worse situation. And so now that this has, you know, gone through the Supreme Court and companies are like applying for reimbursements. Where do you stand? Are you suing to get reimburse for your tariffs? Yeah, you put a claim in, but I don't think that's necessary. They're going to reimburse everyone that put the tariff in. As long as you sign up with them and do all the proper paperwork, it just makes your principle if you suit or not. Okay. And how long do you expect that's going to take to, uh, well, if I say something, I have to knock on wood. So yeah, the court, the judge at the international court, the court of international trade, really put it to the administration a few weeks ago and said, okay, stop, stop slow walking this guys. Went to the Supreme Court, you lost, end of discussion. I apateris illegal. No, there's nothing to talk about now. There's no, there's no more legislation or whatever, no more legal arguments, etc. What we need to have now is a plan. And maybe it's challenging. Maybe it'll take a long time. Whatever it is, we need a plan because people need their money back. You took the money illegally. Now give it back. Very straightforward. Not the first time that that uh, customers in border protection CBP has had to do that, not on the scale. So a few days later, they were giving us, there's like a two-series Wednesday, they had until Friday to respond. CBP came back and said, well, we can do this, but you know, we used to do this by hand and now we got to like, we got to write a computer program basically to do it. So we need some time. We need about about a month and a half to do it. Okay, great. But the judge said, I'm going to check in on you and see how you're doing. And they're making progress. They're making progress. Last I heard was like 40% progress on that. You know, it's happening. So it's happening. There's some other tricky things that have to happen, but there are all these because what happens is when you put an entry in, it will, it closes after 180 days and you have to then, you have to protest to get your money back. So nothing is for nothing, but for the most part, it's going to happen. And what about for obviously in a lot of cases, these tariffs or these increased costs have been passed on to consumers. What does this mean for consumers who have spent extra money on goods? Well, yeah, I mean, this question has come up and look, it sounds nice. The government gives us back 15% and, you know, that we pass it on because I don't know what how that works. But when you ask a question like that, there are, you're making a lot of assumptions that are built into that question. Those assumptions are what, how much and on what products did the importer increase their price? Did the retailer increase their price, right? I can tell you that we did not increase our price, any price by 15%. We increased our prices 6, 7%. Because we're in a weak market and our customers, though retailers and restaurants, they're under the gun. They did not necessarily increase their prices. So how are we going to start measuring that? On top of that, do not overlook the fact that with the, the beginning of the tariffs, the dollar dropped precipitously. My costs, because I pay for everything in euros, my costs went up 12 to 15%. That's not coming back from anywhere. That's a separate issue. And I do not increase my prices. I should have increased my prices 30% to cover my costs. I did not do that. So how do we do that? I mean, there's this, let's be clear. If we, when we get our refunds, not gone wood, this is not a windfall. I'm not taking that money and putting in my pocket. Not to mention the fact that we're going to have tariffs now and maybe we're better prepared for them. And maybe it's a more stable environment. So we can deal with them maybe a little bit better. But that money that are coming back, you know where that money's going? It's going to all the suppliers that have been supporting us through this time that have helped us through here. Because, you know, we had to come up with 15%. So we're squeezing in here and squeezing it there. And, you know, having great relationship with suppliers, it give us a little bit more time. That's where all that money's going. That's not going into my pocket. And I'm sure I am sure a lot of other importers are exactly that same situation. So no, it's not a windfall and those costs did not get passed on. You'd have not seen those prices go up like that. In wine. In wine. In wine. That's probably a lot of that's because of general inflation. The fact that you spend at least $22 for a glass of wine in a restaurant is not about tariffs. It's everything else that's going on the restaurant industry. There's a lot of stuff going on the restaurant industry. They're squeezed, they're margins are squeezed. That was before tariffs. So it's really too complicated just to think that is an easy pass through. Yeah. I would assume in some industries it might be a little bit more straightforward. But in the struggles of the wine industry and like just trying to retain sales. You have to buy the glass place when you're just trying to retain it. You cannot increase your prices 30%. They're going to find something else. Yeah. Because they can't just increase their prices. So they're going to say, well, let's find something else. Maybe you have something else for us. So I'm going to go to another supplier. So yeah, it's way too complex for a simple pass through. I could imagine other industries. But I just in my own lane, I know what I do. And that's enough. That's hard enough. I don't know what other industries do. Yeah. That's hard enough. You're going to see what you're going to see. And I know it gets really tricky when you have longer supply chains than like our industry does. I imagine what should happen is that the various companies along the supply chain, they need to hash it out. If the originating company, the importer that gets the refund back, mark something up directly to the second imposition or the third imposition, you probably could work something out. But in our business, it's pretty direct. We work directly with our wineries overseas. So it's from the, if you will, the manufacturer to the importer/distributor, we do both, the import and distribute. So it is very direct. And so, I mean, you're obviously, wine is a very interesting example of the way that tariffs have come into play, given that it's such an international industry on top of having all of these very complex regulations within the US and like, you know, from that chain differ from state to state in a struggling market. Can you tell us how you got involved in this fight in the first place? Yeah. Well, God, you got to roll it back to 2019 when you had the first tariffs. Group of importers got together, started something called the fine wine alliance. So after that experience in 2019, where we were really caught flatfooted, those tariffs came on really fast and we were not ready for them. Already in 2024, before the election, we knew that tariffs were brewing. And I remember the summer of 2024, the United, they changed their name to the United States, wine trade alliance. And they were already organizing, you know, getting their ducks in the row and hiring the right people. That's a really big organization and they're doing great work. They're not taking a legal approach. They're taking more of a, let's say a diplomatic approach, you know, hiring the right lobbyists and trying to speak to senators from the right states and explain what we're doing. A very important aspect that I learned is that, you know, for every dollar of wine that's imported, we create, our industry creates over $4 a GDP. I think something like $4.25. And it makes sense when you think about the warehouse men, the, the truckers, the waiters, I mean odd and odd, we create GDP. We don't pull from the economy. It's not a negative deal. It's a real positive for this country. One of the many reasons it's just such bad business, this whole tower of thing. So tariffs were very firmly on our mind. And then of course, by the time the New Year came around and there was new president came into power and we knew tariffs were coming. Just pure happenstance, I was having brunch with a family member who works in Washington and told me that his ex-law professor and that's professor Ilya Soman at George Mason Law School was in fact bringing a legal case against the tariffs, which I thought was wonderful news. It's like, wow, somebody's stepping up. You know, don't forget this was after all the billionaires showed up at the inauguration. All the billionaires were throwing money at the new administration, right? They weren't talking at all about tariffs. Nobody was stepping up. All the big corporations, nobody was stepping up. Congress forget it. Nobody was doing anything. So we were just fell left out in the cold. So when I heard that somebody was bringing a lawsuit, I was introduced to professor Soman. And I remember it was a Sunday and I thought, well, I really got in touch with this guy telling what's going on in the wine and spirits industry because like we are really on the front lines of all this. And he called me right back. We had a long conversation. He said, you got to talk to my co-cancel, Jeff Schwab. And we started from there and they thought our story was absolutely perfect for what they're doing. They work at the Liberty Justice Center. This is a nonprofit, nonpartisan group. They kind of lean libertarian. So they're on all sides, but they're always pro-constitution, I would say. And then by the end of that week, because things were moving quickly for them at the case, this was just the week following liberation day. And by Saturday of that week, they asked me to be the lead plaintiff, which was both, which I say, very exciting and very, very scary at the same moment. But you know, at the end of the day, after much deliberation discussing with family, discussing with lawyers that I know, even an AG I know here, without question, I had to do it. It's like nobody was doing anything. That's what it comes down to, you know, and like whatever piece of fate brought that case to my door, when you don't have an opportunity to do something so important, I could not live with myself if I walked away from it. I could have eaten walking away from it. That would have been the safe thing to do. It would have been. It feels very fateful in a way. Oh, yeah. No, it totally was fake. But you know, I could talk about all kinds of fate in terms of how I started my business and everything else. So, you know, we don't live in a rational world. Agreed. There's a reason I had that brunch with that cousin and got in touch with those people. And like Liberty Justice Center, just some of the most amazing people working there. People really believe in the Constitution, the money they spend. You know, we had incredible. Besides Professor Soma and Jeff Schwab, they brought on, you know, Michael McConnell and Neil Cateal. These are, these are two of the top legal scholars and, you know, jurors out there today. I mean, top, top notch guys expensive, but the best of the best. And I really saw that in action when I went to court. So, yeah, it all, it all came together. It all just came together. Yeah, I mean, again, it feels like a very David and Goliath story. Could you just like set up for listeners like one of my, I think you're David. Just put that in context. I got to, I got to work on my physique, then I think. I mean, I think we all do you probably working in these industries. I mean, yeah, can you like to put in context like tell us a little bit more about your business, the size of your business. So we know we've always been what I like to call regional importers. We work in New Jersey, New York, New Jersey, in Pennsylvania. We're starting to sell to some other states now. But that's really the focus, you know, this is our 40th year in business. We always like finding, we work with small farmers. We like finding things that are not typically found here. We follow our palettes. We follow Terwar. We don't follow trends wherever they may take you. And I, you know, if you do business for 40 years, I see a lot of trends. Then and now Feds, Feds disappear. Terwar is forever. Actually, a t-shirt that says this, that's what we're all about. We're all about authenticity and about the table and culture. It all ties together. When you start looking at it into the, dare I say, the holistic aspect of wine, the cultural civilization aspect, it's really kind of easy. You know, I always said, if there's a food culture in a place and they make wine, it's all going to connect and it'll get good. I mean, that's why the wines from Greece that were so terrible for so long, they had all the culture there. So it was only a matter of time before they modernized and got with it. It stopped making brown wines and they started making white wines. You know what I mean? I don't know how many Greek wine tastes. You go to these to be horrible. Then new generation came in, some money came in and they discovered temperature control and things like that. So we've always, we've always followed that and a bit part of that, a big part of that, but I think a big part of Terwar are the people that come from that place and they have a, a palette. That's why Italian wines don't taste anything like French wines, even though they're very close geographically. So that's what we're about. As I said, we're about 20 people. You know, as I said, it's a pretty lean organization, our warehouses in New Jersey, our offices are in New York. And, you know, we all roll up our sleeves and dig in. You know, one of the things that was so important to me was not to create a corporate structure. When I was living in San Francisco, I worked for a bank out there in commercial lending and I. It was a great program. I learned a lot. I learned a lot about business, but the whole, the feeling of it, the structure was really not for me. So I like to think that what we've created at the OS elections is more of a horizontal structure. We all have different roles. And of course the buck has to stop. You know, it's not, it's not one man one vote, one person one vote, excuse me. But we're all evil. And, you know, I watched the dishes in the office quite often. Or I drop a bottle off of a sample because the rep can't get there or do a tasting or to roll in it. We all do the same thing. Why not? If that's very important to me is just to have a different kind of structure. I, the whole corporate thing really was eternal. Well, and that's sort of like the definition. I mean, you know, every small business is different, but that mindset is sort of like what one would think of when it comes to a small business as opposed to these major corporations that could have been the lead plaintiffs in this case. I don't know what they could have, but you know what? It was much easier for them just to write a check. Let's not rock the boat. Remember when I think it was Walmart started putting an extra surcharge on there for the tariff. Was it all my or Amazon? Amazon did too, but I think Walmart maybe one, one did it and one spoke about doing it. I forgot, but there was both the Amazon and Walmart. We're going to do something. One of them did actually. Oh, Amazon did and then they, and then Bezos said, Oh, somebody in my organization did that. We'll stop that right away. You know, come on. Yeah. Because they knew the tariffs were bad, but God forbid they say anything about it. Yeah, I mean, but like I think at the same time, I'm sure that, you know, when you get to that larger level of like corporate structure, there's probably all sorts of lawsuits that happen on various things that you're getting involved in. Like what was going through the court system all the way up to the Supreme Court, like for you, had you ever been involved in like lawsuits before? No, no. I started the OS elections with very simple idea. I wanted to work with great people. I wanted to work with small family farms. I wanted to work with a high level of integrity. I wanted products I worked with to have authenticity products that I could really be excited about. Products that were delicious products that brought great value to the market. That's what was our our secret sauce, you know, we're going to work as directly as possible. We're going to be importers and distributors. And we're going to bring things to the market that are really delicious, that are going to get people's attention. That's why we're going to succeed because we don't have a big marketing budget behind us to push, you know, 50 million cases of the next whatever, you know, generic kind of wine. Our wines have to stand out on every level. And yeah, so I mean, like going through that, going through the process, I mean, what did it feel like, like moving up through the court system, like making it to the supreme. That's a huge deal. Well, super exciting. Yeah, it was really exciting. I mean, like I kind of thought court of international trade, three zero, we won. Okay, slam dunk. Let's go home, so about a bottle of champagne. But all the lawyers at that point said, calm down. down, this is going to Supreme Court. We just have to go through the process. And I thought, like, if you're in business, you want things to move quickly, I thought things were moving like, God almighty, this is snail's pace. They were saying, Victor, you don't understand the law, how things work. This is super fast. And then the fact is, the Supreme Court did fast track it because it was a really important case. - Yeah. - Because it touched on so many aspects. And I mean, what did it feel like when you, well, like were you expecting that you would win at the Supreme Court? Like what? - Well, sure. So any, if you're, you see that I did, I was very careful, I'd say, not if we win, I'd always say, when we win at the Supreme Court, when we win, but of course, anything could happen. And we're living in a time, and we've seen plenty of anything, anything's happening, right? Our case was so strong, you know, we had six strong legal points that we brought to bear on this case. We only had to win on one of them, just one, and we win the case. And then after going to the Court of International Trade, I saw the case that the administration brought. It was, it was wet toilet paper. It was nothing, nothing. And you can see the judges, they just tore that guy up. I kind of felt sorry for their lawyer. He hit, nothing, he had no case. There was no case. I mean, look, you know, when I started this and talked to Elias Somin, that fateful Sunday in April, I wanted to tell him about tariffs and the terrible impact on our business, and it was a bad business situation. But I did not know the legality. I'm studying this stuff, you know, I don't know what to think about it. I just know, you know, import, pay your, you know, pay your, pay your customs and duty, move on, try to sell your products, talk to, you know, sommeliers and wine buyers, et cetera. I didn't know anything about this. And then discovering all the legal ramifications of what was done, I could understand where the Liberty Justice Center jumped on this case and really made something of it. It was blatant overreach of power. You know, we have this tripartite system. It's a great system. The founding fathers were some smart dudes and they set up a really good system of checks and balances, checks and balances. This, these IEP tariffs had no checks and no balances. It was just a blatant overreach of power. I mean, it was gross. You know, after the court of, you know, after the federal district court, the after we won, Wall Street Journal came out and said, we should win 9-0. Wall Street Journal, that left-wing loony rag, you know. - They do really good reporting, though. - No, I, they think they do good reporting. That's my point. - Yeah. - Anything that's necessary with the administration was left-wing loony, those left-wing wool ticks. They're crazy. And the boasting, the boasting about all the money that they were taking from our pockets and lying to Americans and saying that this was coming from foreign entities. That really pissed off a lot of people. Know who's really pissed off? Republicans. Republican businessmen, they are really angry. I know 'cause I get their emails. I get letters. I have a pile of letters. I, after we won on the 20th, we got, I don't know, like 1,500 emails that we get. Which we tried to answer as many as we could. All across the political spectrum. - It goes against sort of that old school fiscal conservative doctrine. - Holy. - Gents, a lot of norms that were, that have developed in this country for decades now. - Absolutely. - Yeah, it was definitely normal about it. - Nothing. What, what campaigns did you open after you won your cases? - Which I tried some old shout out to pop. I'm sure there was some shame of pain in there. You know, we were so busy. It's been such a busy time deal with all the junk that we're dealing with and to market that it is. I mean, funny enough that night. I didn't do much because I already had tickets for the ballet and I ran into some people funny enough that congratulated me there. Like, that's strange. That I go to the ballet like that often. But, you know, I had gotten tickets a while ago and did not think that we were gonna get a decision that night. So, you know, we celebrated the next night and we've had some celebration since then, but then I had this hip thing and so it's, it's been bumpy. - Yeah, well, it's like-- - It's like a-- - It's not like it didn't come about due to a bunch of difficulties and stressors that you had to address. So, you know, try to find the time, I think, to celebrate. But it is pretty remarkable that you made it all the way to the Supreme Court. I mean, that's a very small percentage of the population gets there. - It was an incredible experience. Totally unexpected. Totally out of body to be in the Supreme Court. Not just to be there, it was kind of amazing. - And to be our case being pled at the Supreme Court is kind of amazing. And then to win, and you knew you're gonna win. But like, to get back to your question before and I don't think I answered it, it's that you think you're gonna win, but until you actually do, you haven't won. - Yeah. - You know what I mean? You can think all you want, or what should happen, should happen this way, it should go our way, but not necessarily. So, that was really something. That was really something to that Friday morning. I mean, like, what did it feel? I mean, do you even know what it felt like or was it just so surreal? - Oh, it was incredible. It was insane. Well, first of all, so we were on, this is, you know, this is the fourth time we were sitting down waiting for the opinion. And there was a large, large group of us on this Zoom call, 'cause of course the plaintiffs were there. And some of the legal team was there. Some of the legal team was actually at the court. The public relations group was on there. There were other people there, like Amicus briefs. We'd done a lot of stuff with the Kato Institute, another left-wing Looney organization. I just like pointing that out, because, anyway, so we're all on this call. And we had all been together three times before. I mean, we'd all been to the altar, right? We were all waiting. Whatever metaphor you want to use. It's like, and I really thought three times was a charm. We're not charm. So we're like controlling our expectations in a big way. 'Cause like, okay, we're here again. We're gonna get together, we're gonna sit around in our, whatever, you know, whatever morning this is. It's supposed to be a decision. Probably not gonna happen. We're gonna win 'em. So Molly, who got it. She's one of the, yes, she's on the legal team. There's so many different teams and stuff. Anyway, so she was on the legal team. So she was, wait, I got something here. And she starts reading, and you should read this, 'cause it's quite interesting. Judge Chief Justice Roberts, introduction to the decision. So she starts reading in. And it's not, and Sarah Ulbrecht, who's the head of the Liberty Justice Center. She said she had exactly the same response, and she was in the court. When he started speaking, it was not at all clear what the decision of the court was going to be. And it took some time, and of course, and we're all kind of thinking on the more pessimistic side, you know, like, probably not gonna go our way, whatever, you know, it sounds good, but. And starts reading and starts reading. And at some point, they said, Molly, stop, stop, wait. What are you saying here? I mean, did we win or did we lose? What is going on? And then she's looking at it. She's a lawyer, and she's looking at it and going, well, I guess we won. And then of course, I got up and danced, and it was, that I cried. You know, it was like, you know, every freaking emotion ran through my body, like electricity, it was insane. You know, it was, even though everything else, all the weight and all the expectation, it still was amazing to actually win at the Supreme Court. Our company won this case. I mean, that's, you know, drop the bike. I can retire tomorrow, I guess. It's pretty incredible. I mean, really get out of way out of shape, yeah. (laughing) I'll never give you David. Well, I mean, now after this, I mean, this is like a life changing probably like, yeah. I want some America. I'll be forgotten about in about 35 seconds. And while still, that's like an experience though that like, I'm experiencing. It's fantastic. That, no one's gonna take that from me, absolutely. But yeah, like what's, you know, after that, what's next? For me, I just, look, I just want my business to succeed. My daughter is 30 years old. She's been working with me for, I don't know, seven years, eight years. I'd love to have something strong. I'd like to have a strong business to pass on to her. There's a lot of that's all I care about really. That's what I care about. You know, through this whole process, that's where it's all been always it's about. You know, you want to have your little piece of the pie. You want to make your thing work. Yeah. You know, I don't need any other more exciting things than that. You know, they brought it, let me just a cent, you're brought another case, a follow-up case. And I'm glad they didn't ask me to be anything involved to that case. Because I don't think my constitution could take it. Or the time I just want to, you know, I just want to get healthy again. And I just want to, you know, get our business going in a really rocky environment. You know, I'm optimistic, but doesn't mean it's not hard. Yeah. Well, I'm sure the work and the effort and the nerves that you put into this case are going to help a lot of other businesses and people like you kind of whether this current storm that we're in. I do hope that's something that I think is really important. And I've seen it already is that our win has been very encouraging for so many businesses. And they say that to me, you know, it was a pretty dark time. It's late April. And not that we're out of it, but there's so much more encouragement. There's just a glimmer of hope. And also we're seeing, you know, FedEx, so the government costs co-soothe the government. They want their tariffs back. So it's giving people cover. It's giving people strength. And I'd like to believe that's going to filter into Congress. And the Congress is going to go well. I don't know what Republicans in Congress, obviously. They're going to say, well, I'd like to vote for your tariff renewal in July. That's when these first tariffs are going to be renewed. But you know, I've got all these constituents. Good voters, my constituents that voted for me and put me into office here. And they're not happy with tariffs. In fact, they hate them. In fact, it's killing their businesses. I can't and good conscious. I can't get reelected if I vote for this illegal tax or maybe it's illegal tax. But it's bad tax. Like, why are you taxing them? I'm not taxing them. So that, that's my hope. That's what I'm looking towards the future for. That we get some real balance. I hope we lit a fuse. I sounds like you did. And, you know, the collaborative spirit of, you know, kind of taking one for the team and going all the way up there. You know, will I think filter through to other businesses and at least help people feel supported through this. Yeah, yeah, yeah, they see the thing. And it's about our justice system too, you know, they see that it worked. Yeah. Because you really didn't see much else happening, much else working. They felt powerless. Yeah. Yeah. And this, and that's all over the world. It's not just American businesses. Think about how many international businesses have been impacted. Think about how many international businesses really counted on the United States as a great trading partner. You know, and they're not trading with the United States of America. That little producer of key on T. They're trading with Victor Schwartz at VOS selections on their trading partner. But I'm part of the United States. They have to trust me, but they also have to trust my community. So it really impacted them. So it's, this is a broad international event. Yeah. Well, I for one, I'm really proud of the work that you did and think it's really impressive. And I'm sure others feel the same way. And, you know, it's like sometimes you just, by doing the, your part, you make a big difference. And, you know, restoring a sense of justice. I agree. It worked. God bless. Thank you. Thankfully. So, yeah. Well, thank you so much, Victor, for speaking with us. And taking the time of an absolute joy. Thank you for speaking with me. Thanks. [MUSIC] When his long been used as a source of connection from cultural and religious traditions to just sharing a bottle of friends at a dinner party. Here, it's really cool to see how industry players like Schwartz are fighting to keep those connections and more importantly, relationships alive. Have you been impacted by tariffs? If so, we'd love to know more. You can email us your comments and questions at podcastandwindanthusias.com. Feel free to browse the industry news section of the site for more tariff coverage. Also, remember, you can subscribe to this podcast on apples, Spotify, and anywhere else you listen to your favorite shows. You can also go to windanthusias.com/podcast for more episodes and transcripts. I'm Sarah Ventira. Thanks for listening. [MUSIC]

Podcast Summary

Key Points:

  1. Victor Schwartz, founder of Wine Enthusiasm, led a Supreme Court lawsuit against Trump-era tariffs under the International Emergency Economic Powers Act (IEPA), winning a 6-3 ruling that deemed the tariffs illegal.
  2. The administration quickly imposed new tariffs (10%, set to rise to 15%) under a different authority, limited to 150 days and requiring congressional renewal.
  3. Tariffs caused widespread uncertainty in the wine industry, increasing costs for importers, disrupting supply chains (e.g., glass, corks, barrels), and harming domestic wineries reliant on exports to markets like Canada.
  4. Schwartz’s business paid significant tariff costs, leading to contraction, reduced inventory, and zero appetite for risk, though staffing was maintained.
  5. Reimbursements for illegally collected tariffs are underway through the Court of International Trade, with CBP working on a repayment plan; Schwartz expects refunds but notes they will go to suppliers, not as windfall profits.
  6. The lawsuit arose from prior tariff experiences in 2019 and coordination with the United States Wine Trade Alliance, with Schwartz stepping in when larger entities failed to act.

Summary:

In this podcast episode, Wine Enthusiasm Digital Director Sarah Ventira interviews Victor Schwartz about the aftermath of the Trump administration’s “Liberation Day” tariffs and his successful Supreme Court lawsuit. Schwartz explains that the initial tariffs, imposed under the International Emergency Economic Powers Act (IEPA), were ruled illegal in a 6-3 decision because the act was never intended for tariffs, which belong under congressional authority. The administration quickly replaced them with narrower tariffs under a different statute, limited to 10% (set to rise to 15%) and requiring renewal every 150 days by Congress.

Schwartz details the chaos tariffs caused, including instability that crippled business planning, increased costs for imported goods like wine, and ripple effects throughout the supply chain—from glass and cork imports to domestic wineries losing Canadian markets due to boycotts. His own company paid six-figure sums in tariffs, forcing contraction, discounting, and reduced risk-taking, though staffing was preserved. Reimbursements for illegal tariffs are progressing, with the Court of International Trade pushing Customs and Border Protection to develop a repayment plan.

S. economy despite claims of protectionism.

FAQs

The Supreme Court ruled that the tariffs were illegal because the administration used the International Emergency Economic Powers Act (IEEPA), which was never intended for tariffs and does not mention them. The court said the president lacked authority to impose broad import taxes under that statute.

After the IEEPA was struck down, the administration imposed new tariffs up to 10% under a different authority, limited to 150 days with renewal requiring Congress. These are narrower in scope and more limited in time compared to the previous tariffs.

The tariffs caused significant disruption, forcing importers to contract by discounting products, reducing inventory, and cutting SKUs. Domestic wineries were also affected because they rely on imported corks, glass, barrels, and equipment, and the tariffs squeezed cash flow throughout the supply chain.

His business paid six- to seven-figure tariffs, leading to a squeeze that required discounting products, reducing inventory, and cutting risk. They avoided staffing cuts but had to focus entirely on paying tariffs, which diminished their appetite for risk.

Yes, importers can file claims for refunds. The Court of International Trade ordered the administration to stop slow-walking the process, and Customs and Border Protection is developing a system to handle refunds, with progress reported at about 40%.

No, because importers like Schwartz did not fully pass on the tariff costs to consumers—they raised prices only 6-7% despite a 15% tariff—and the refunds will go to paying suppliers who supported them during the crisis, not as a windfall.

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