5 Effects of Tariffs on Wine and the Coming Market Shakeup

The US is the world’s largest wine importer, but perhaps not for much longer. Trump’s tariffs are likely to raise wine prices and reduce imports. If you are a consumer of imported wine, especially higher end wines from Europe, good sense suggests that you stock up over the next few weeks before prices go up.

The election is over, and Trump’s higher tariffs are on their way.  It’s difficult to know how all of this will sort itself out because higher tariffs imposed by the US on wine and other goods will be met with tariffs and trade restrictions by our trading partners.  Trump’s real-world experiment with a 25% tariff in 2019 resulted in a 20% decrease in French wine imports to the US by value and a 30% decrease in German wine imports to the US. That tariff was rescinded in 2021 after negotiations, and the same may happen this time. But the 2021 recision occurred under a new administration, and that will not be happening at least for the next four years.

If higher tariffs on wine and other US imports are longer lasting than the last time, several possible results are likely.

1. Consumer prices on imported wines will increase.  The US is the world’s largest importer of wine by value, importing almost five times more than it exports.  With wine imports accounting for about one-quarter of total US sales, higher prices from tariffs will further reduce wines sales in an already challenging market. US wine importers will see sales decrease still further, and some may have difficulty surviving.
2. Prices on domestic wines will also increase, the result of reduced foreign competition and higher production costs resulting from higher labor costs (mostly from restrictions on immigrant workers). US growers are likely to respond to higher labor costs by increasing mechanization, but high-end wines that require hand harvesting will see especially high cost increases.
3. Radically higher (60-100%) tariffs on Chinese imports are likely to result in a response that imposes higher tariffs and/or market restrictions on Chinese imports of US wine. China already imposed a 54% tariff on US wine in 2018, causing exports to China to fall.  US wineries dependent on exports to China will see sales decline further.
4. Trump’s teetotalism and Robert F Kennedy Jr’s history with addiction suggest a resistance to negotiating lower tariffs for wine and other alcoholic products. And all of this is happening in light of WHO’s neo-prohibitionist stance and the changing tastes of young people.
5. The net result? Higher consumer prices on imported and domestic wines. Higher production costs for US producers. Lower sales for producers and importers of foreign wines, especially the high-quality foreign wines that US consumers particularly favor.

Obviously, all of this will play out with unexpected wrinkles.  However, if you are a consumer of imported wine, especially higher end wines from Europe, good sense suggest that you stock up over the next three months before supply diminishes and prices go up.