The prospect of European wines losing their effervescence in the American market has emerged sharply as the United States considers imposing hefty tariffs. On Thursday, President Donald Trump threatened a potential 200% tariff on European wine, Champagne, and spirits as a counteraction if the European Union proceeds with its plan to implement a 50% tariff on American whiskey. This potential tariff increase has sparked worry among wine sellers and importers, who warn that such a steep tariff could virtually freeze the European wine trade in the U.S.
Ronnie Sanders, the CEO of Vine Street Imports in New Jersey, expressed his concerns, suggesting that customers may not be inclined to pay two to three times more for their favorite European wines or Champagnes. Similarly, Jeff Zacharia, president of Zachys, a fine wine retailer in New York, emphasized the heavy reliance on European wine, which comprises 80% of his sales. He pointed out that the significant gap left by European wines could not be readily filled by domestic wines alone.
“This would severely affect the entire U.S. wine industry,” Zacharia stated, reflecting the broader concerns about the ripple effect this could have, even on American wineries. Amidst these uncertainties, Zacharia has halted European wine purchases until a clearer picture emerges. He highlighted the difficulty in business planning without knowing if tariffs would be set at 200%, 100%, or 10%.
According to data from IWSR, European wines and spirits constituted about 17% of the total consumed in the U.S. in 2023, with Italy and France as significant contributors. In general, the U.S. imports a greater volume of alcoholic beverages than it exports, with foreign-produced alcoholic drinks valued at $26.6 billion in 2022, which notably outweighs the $3.9 billion worth the U.S. exported.
IWSR U.S. President Marten Lodewijks noted that while a 200% tariff is not without precedent, such duties are usually more selectively applied. He drew comparisons to China’s past imposition of tariffs up to 218% on Australian wine, which led to a drastic drop in Australian exports.
The brewing tariff conflict stems from the EU’s proposed levy on American whiskey in response to previous U.S. tariffs on steel and aluminum. President Trump called for the immediate removal of the EU’s upcoming tariff, warning of reciprocal tariffs on European alcohol. However, his statement mistakenly included Champagne, a protected designation associated exclusively with France.
Reaction from Europe was swift, with figures like Ettore Prandini of Italy’s Coldiretti agriculture lobby calling for a halt to actions that could lead to a trade war detrimental to U.S. consumers and farmers. Italy’s wine industry, significantly boosted by exports like prosecco, has seen growth, with export values tripling over two decades. Meanwhile, French exports of wine and spirits to the U.S. are valued at a substantial 4 billion euros annually.
French industry representatives have echoed these concerns. Gabriel Picard, leading the French Federation of Exporters of Wines and Spirits, warned of dire consequences for France’s alcohol export sector, stating that a 200% tariff would bring French exports to the U.S. to a complete stop. Jacques Barreau from Grain de Sail, which transports wine across the Atlantic, revealed that anticipated tariffs have already led to shipment cancellations.
While some U.S. wine businesses saw an opportunity to push sales before any tariffs enhance prices, there was skepticism about the feasibility of a 200% tariff materializing. With European wines making up a significant portion of their inventory, businesses are keenly observing the situation, awaiting clarity amid the shifting landscape. Large retailers and distributors have been quieter, abstaining from comment regarding the potential changes.