Trade Policy Uncertainty: the Ultimate Wine Label Remover

This paper examines how trade policy uncertainty (TPU) affects the extensive margin of international trade (new product entry decisions) using a novel dataset of wine Certificate of Label Approval (COLA) applications submitted to the U.S. Alcohol and Tobacco Tax and Trade Bureau (TTB). Because TTB regulations do not require new applications for routine vintage updates or minor format changes, each COLA application represents a genuine, forward-looking business decision to introduce a new product or refresh an existing product in the U.S. market. Exploiting the November 2024 U.S. presidential election as a regime change in trade policy uncertainty (TPU), accompanied by various threatened and implemented tariffs in 2025, I estimate difference-in-differences (DiD) models comparing EU wine producers (treated) against domestic U.S. producers (control) using a weekly panel of application counts. While some tariff-related events in 2025 appeared to have more intense negative impacts on weekly EU applications, the coefficient for the post-election treatment implies a 21.7% reduction in EU wine product applications in the 61-week post-election window to the end of 2025. When the TPU index is included as a control, the post-election coefficient is attenuated by approximately 72%, consistent with the sustained post-election rise uncertainty being the primary driver of the decline. To complement the DiD analysis, a counterfactual model that exploits the close pre-2025 relationship between US and EU applications estimates a reduction of 14,899 foregone applications over the post-election period, equivalent to a 23.5% reduction as compared to pre-election figures. These results document an upstream disruption to wine producers that are not directly captured in traditional trade flow statistics: uncertainty deters new product introductions before any tariff is imposed or shipment is made.