The United States is becoming less welcoming for European wines. Recently, President Donald Trump issued a warning about a potential 200% tariff on European wine, Champagne, and spirits. This comes in response to the European Union’s plan to implement a 50% tariff on American whiskey. Leaders in the wine industry are concerned that such a steep tariff could devastate the European wine market in the U.S.
Ronnie Sanders, the CEO of Vine Street Imports in New Jersey, expressed doubt that consumers would be willing to pay significantly higher prices for their favorite European wines and Champagnes. He emphasized that most customers would not want to see a drastic price increase that could triple their usual costs.
Jeff Zacharia, who heads the fine wine retailer Zachys in New York, echoed these concerns. He pointed out that around 80% of his wine sales come from Europe, indicating how dependent U.S. importers are on these wines. He believes that a 200% tariff would negatively affect not only the importers but also U.S. wineries, given the interconnected nature of the wine distribution network.
With so much uncertainty in the air, Zacharia has halted his purchases of European wines until the situation becomes clearer. He stated that it’s challenging to plan for the future when there’s no clear direction on tariffs.
According to data from IWSR, a firm that tracks alcohol consumption, wines and spirits from the European Union made up 17% of the total alcohol consumed in the U.S. last year. Out of this, Italian wines accounted for about 7%, while wines and spirits from France constituted another 5%.
Overall, the U.S. has a much larger import market for alcohol compared to exports. In 2022, foreign alcoholic beverages brought in $26.6 billion, making up 14% of U.S. agricultural imports. In contrast, U.S. exports of beer, wine, and spirits were worth $3.9 billion that same year.
Marten Lodewijks, president of IWSR in the U.S., mentioned that such a high tariff isn’t entirely unprecedented. He referenced China’s tariffs of up to 218% on Australian wine in 2020, which severely impacted exports. Although those tariffs were lifted last year, Australia’s wine industry had already suffered considerably.
The proposed European tariff on American whiskey was previously established in retaliation for the U.S. imposing tariffs on steel and aluminum. As these trade tensions escalate, Trump made it clear through social media that if the EU doesn’t retract its tariff plans, he would move forward with imposing the hefty tariff on wines and spirits from Europe. He proclaimed that this would benefit the U.S. wine and Champagne businesses, even though some nuances about specific wines weren’t accurate.
Responses to Trump’s statements from European leaders were immediate, with concerns about escalating trade wars. Ettore Prandini, leader of Italy’s agricultural lobby, warned that such actions would ultimately hurt American consumers and farmers alike.
Italian wine exports to the U.S. have seen tremendous growth over the past two decades, now worth approximately $2.1 billion. Similarly, the U.S. market for French wines and spirits is estimated at $4.3 billion annually.
Gabriel Picard, head of the French Federation of Exporters of Wines and Spirits, described a potential 200% tariff as devastating for France’s alcohol export sector. Many businesses have already begun to freeze their shipments, anticipating these tariffs would make exporting to the U.S. unfeasible.
In the U.S., some wine bars have seized the moment, offering sales to encourage customers to stock up before potential price hikes hit. Conversely, there are questions about whether such high tariffs will actually be enacted, with one store owner noting the rapidly changing situation.
In this complex environment, it is clear that the future of European wines and the broader U.S. alcohol market hangs in the balance as discussions continue regarding tariffs and trade relationships.
