Overview

This repository contains an advanced economic analysis of how a threatened 200% U.S. tariff on EU wine and Champagne, announced March 13, 2025, could affect prices in Hong Kong as of March 14, 2025. The study contrasts mid-range wines ($20-$50) and luxury wines (over $100) using sophisticated mathematical models and economic theory, including Ramsey optimization, differential equations, and Nash bargaining. Key Findings Mid-Range Wines: Prices drop ~27% ($40 to $29.30) due to dynamic oversupply (400,000 extra bottles). Luxury Wines: Prices rise 5% ($200 to $210) as prestige demand and bargaining offset a 20,000-bottle influx. Implications: Hong Kong gains mid-range affordability, EU producers lose revenue, and trade tensions risk escalation.

Methodology

Mid-Range: Ramsey intertemporal utility maximization and differential supply adjustment. Luxury: Veblen goods demand with Nash bargaining between EU producers and Hong Kong buyers. Data: Assumes 80M mid-range and 10M luxury bottles displaced globally, with Hong Kong absorbing 0.5% and 0.2%.

Contributing

Interested in refining the models or extending the analysis (e.g., China’s re-export role)? Fork this repo, make changes, and submit a pull request. Issues and suggestions welcome!