Trump’s 200% Tariffs Could Devastate the American Wine Industry

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In the latest fallout from a tit-for-tat trade war that has markets reeling, the United States wine industry is bracing for the effects of 200 percent tariffs on European wine and spirits imports. In short, the U.S. placed a 25 percent tariff on metal imported from other countries; the E.U. struck back by implementing 50 percent tariffs on a variety of goods from the U.S. that includes bourbon; and on March 13 President Trump posted on Truth Social that if the tariff were not removed immediately, the U.S. would place a 200 percent tariff on all wine, Champagne, and spirits coming from the E.U. While both sides have paused their tariffs until the middle of April, which may allow for some negotiation, the threat still looms, leaving uncertainty on both sides of the Atlantic.

U.S. Trade Alliance Warns Members

On March 18, the U.S. Wine Trade Alliance (USWTA), an industry group that represents thousands of family-owned businesses across the United States, posted a statement on Facebook and sent an email to its members to “halt all shipments of wine, spirits, & beer from the E.U.,” because the risk of tariffs was currently too high. Signed by alliance founder Ben Aneff, who is a partner at New York City’s Tribeca Wine Merchants, the letter explained that there was no guarantee of an exception for “goods in transit.” Previously, the USWTA had distributed a letter for members to send to commerce secretary Howard Lutnick, treasury secretary Scott Bessent, and trade representative Jamieson Greer, asking them to consider the destruction that increased wine tariffs would cause across the entire wine sector. Aneff tells Robb Report that although tens of thousands of letters have been sent, “there has not yet been a hearing or open comment portal to allow normal businesses to comment on a tariff issue.” However, members of the alliance have been meeting with members of Congress every week, and Aneff states that once Congress members learn about the downstream businesses supported by wine, they “always understand how bad wine tariffs are for our country.”

An Importer’s View

We reached out to a wide network of owners and CEOs at wine importers across the country, almost all of whom declined to respond to questions about tariffs, citing the sensitive political nature and the need to communicate with employees, suppliers, and customers before commenting publicly. However, Don Opici, CEO of Opici Wines & Spirits, said the proposed tariffs would destroy business in the U.S. for the affected brands, who would have to seek alternative markets for their wine. While he has no intention of firing or laying off employees in the near future, Opici says, “I can imagine companies being forced to do that if their business collapses.” Wine shops and restaurants would have to adjust their inventory, and European wines “would come off wine lists and lose shelf placement and floor space at retail,” he says.

Jenny Lefcourt, president and cofounder of Jenny & Francois Selections, an importer specializing in natural wine, wrote an opinion piece for The New York Times in January 2020 about the wine tariffs that had been implemented late in the previous year; the article has been heavily re-shared on social media in the past two weeks. Citing the domino effect of wine distributors (the middlemen between importers and retailers) being unable to supply their customers with affordable wine, she wrote, “Trucking, warehouse, and shipping companies will all be affected. Office assistants, truck drivers, forklift operators, logistics coordinators, bookkeepers, and restaurant chefs and servers could all see their jobs in peril.” 

Retailers and Wine Bars Would Be Hard Hit

There is no evidence to suggest that American wine drinkers who enjoy glasses from France, Italy, Spain, Austria, or Germany are suddenly going to switch their preference to nothing but American wine. We are not talking about widgets being stamped out in factories that could operate anywhere on Earth. “The world’s greatest wines are inherently tied to their origins, whether a singular parcel in Burgundy or an iconic Napa hillside, each bottle tells a story that cannot be replicated elsewhere,” says Lauren McPhate, another partner at Tribeca Wine Merchants. With an inventory that boasts 75 percent European wine, McPhate says the distributors who represent the best U.S. domestic wines all rely on the sale of imported wines, too, so tariffs would affect her suppliers as well. “A 200 percent tariff would be devastating to any business in the U.S. wine industry, and it would fundamentally alter the landscape of great restaurants and fine wine retail,” she says.

Heidi Turzyn, co-owner of retail shop Beaupierre Wine & Spirits, has begun stockpiling some customer favorites from France, which she realizes is not a long-term strategy. “We’re a very small store, so we don’t have the finances to stock up on a lot,” she says. With a clientele that is heavily into European wine, Turzyn doesn’t see an alternative business model if those wines are out of the price range for her shop or her customers. Peter Cecere and Marni Halasa, proprietors of the Purple Tongue wine bar in Hell’s Kitchen, are actively sourcing a variety of wines from domestic and new world producers, but they are both living with a constant feeling of unease in the current news cycle. “The sudden imposition of these tariffs has left us feeling as though we’ve lost some control over our business’s direction. We’re committed to weathering this storm, but it’s undeniably a challenging situation,” Cecere tells Robb Report.

Won’t Tariffs on Imports Help American Winemakers?

Despite the president’s claim to the contrary, tariffs will also hurt many of the people who grow grapes and make wine within the United States. “We have a very successful distributor in the middle part of the country who sells our wines but also sells a good bit of imported wine,” says Adam Lee, owner and winemaker at Clarice Wine Company in California. That distributor currently has three containers of European wine en route to our shores. “If the tariffs were implemented today at the 200 percent level, then they would owe an additional $600,000 in taxes,” Lee says, which would make it impossible for the distributor to buy any of his or another American winery’s bottles. He also worries about tariffs on other products from Europe such as oak barrels, bottles, or cork. “French oak is a different species of oak than American oak,” he says. “A vintner cannot simply replace one with the other without changing the entire profile of his or her wine.”

Who Will Benefit

Is it all bad news if 200 percent tariffs on European wine are put into place? Every cloud has a silver lining. Aneff corrected himself after saying there is “no benefit whatsoever” to the tariffs. “I guess that’s not entirely true. U.S. tariffs on E.U. wines would be great for Canada and China, who could then buy E.U. wines for less money. But they are terrible for the United States,” he said. Pretty much the entire United States wine industry agrees.

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