NOEL KING, HOST:
If you're looking to buy a new handbag, some cognac or a lipstick, you could be looking at higher prices. That's because the Trump administration is putting new tariffs on goods from Europe.
NPR's Scott Horsley explains why.
SCOTT HORSLEY, BYLINE: Judy Taylor runs an upscale boutique in New York City called Madison Avenue Couture. Among the items she sells are luxury handbags from Paris, which can retail for thousands or even tens of thousands of dollars.
JUDY TAYLOR: We specialize in Hermes. We have a robust online website and a by-appointment-only showroom.
HORSLEY: Business, especially online, has been good, Taylor says, even during the pandemic.
TAYLOR: If you can't travel and you want to do something for the holidays, the chances are you're going to buy something luxurious.
HORSLEY: But the cost of importing French handbags is about to go up. As of today, the Trump administration is imposing a 25% tariff on more than a billion dollars' worth of French imports, including lipstick, fancy soap and handbags. That's a challenge for Taylor, who was already facing higher prices for bags as a result of factory shutdowns last spring.
TAYLOR: What'll happen is basically the same thing that happened with everything. It gets passed on to the consumer.
HORSLEY: The administration says it's levying these tariffs in retaliation for France's new tax on digital services, which critics say unfairly targets U.S. tech giants like Google and Facebook. Matt Schruers heads an industry trade group called the Computer and Communications Industry Association.
MATT SCHRUERS: When our trading partners are naming their new taxes after U.S. companies, it's clear they're targeting American business for discriminatory treatment. And it's necessary to take a stand.
HORSLEY: And the new tax on handbags is not the outgoing president's only parting tariff shot. Next week, the administration uncorks new import taxes on cognac and certain wines from France and Germany. Christine Locascio of the Distilled Spirits Council notes other European wines were already hit with import taxes as part of a long-running battle over government subsidies for rival jet-makers Boeing and Airbus.
CHRISTINE LOCASCIO: It's very unfortunate that our industry continues to be the victim in these trade disputes that have nothing to do with our industry.
HORSLEY: But that kind of collateral damage is not unusual in a trade war. Scott Lincicome of the libertarian Cato Institute notes that European tariffs took aim at bourbon in an effort to get the attention of Kentucky Senator Mitch McConnell.
SCOTT LINCICOME: The idea is to cause some pain to exporters that are politically connected.
HORSLEY: American whiskey exports to Europe have plunged by 41% since those tariffs were imposed. Locascio says the pain is not limited to McConnell's home state.
LOCASCIO: You know, American whiskey is actually exported from U.S. distillers located in 39 states. So it's not just the Kentucky or Tennessee issue. It really is a United States issue.
HORSLEY: In a couple of weeks, the new Biden administration will take charge of U.S. trade policy. While the president-elect has promised a more conciliatory approach, Lincicome is not holding his breath that tens of billions of dollars in Trump tariffs will suddenly be unwound.
LINCICOME: Given the kind of current populist moment in the United States, it's going to be difficult for the Biden administration to eliminate all of them.
HORSLEY: At Madison Avenue Couture, Judy Taylor is still hoping the incoming administration does lift the tax on French handbags. Otherwise, she says, people seeking a luxury gift may turn to Swiss watches instead.
Scott Horsley, NPR News, Washington. Transcript provided by NPR, Copyright NPR.
