The Impact of Tariffs on the Wine Industry: What You Need to Know Chris Lehoux, January 25, 2025 Speculation is rising about new tariffs on imported wines as the current administration begins its term. This concern is reminiscent of the previous administration’s actions, particularly the 25% tariff imposed in October 2019 on still wines from France, Germany, Spain, and the UK due to a trade dispute with the EU. The repercussions of that decision resulted in heightened costs for importers, distributors, and ultimately consumers, disrupting the market significantly. The wine industry is apprehensive that new tariffs could reach as high as 100%, although much of this remains conjectural. This uncertainty has all members of the three-tier distribution system—producers, importers, distributors, and retailers—preparing for potential challenges ahead. According to Alex Michas, president of Vintus Wines, the last episode of tariff imposition saw industry players absorbing costs to minimize consumer impact; however, this time the scenario might differ. If a 20% tariff is enacted, consumers should brace for a corresponding rise in wine prices. Should tariffs be implemented, the three-tier system would face serious upheaval. Simone Luchetti, president of Banville Wine Merchants, explains that a 20% hike at the importer level might escalate to a 35% increase by the time the product reaches the consumer. A typical bottle of wine incurs costs at various stages before reaching the shelf: Producers sell to importers. Importers incur fees for shipping and storage. Distributors purchase from importers for retail or restaurant sales. For example, a bottle priced at €7 could retail for approximately $30, but with a 25% tariff, that price may rise to nearly $39. The operational strain on distributors and retailers could be profound, especially for businesses that heavily rely on imported wines. The multiplier effect means that the repercussions extend beyond direct financial impacts; they affect the entire market dynamics. Despite previous tariffs giving short-term boosts to some domestic wineries as consumers turned to local options, the long-term view indicates more significant risks. Many local producers require a healthy distribution network, which would be jeopardized if imports diminish. Furthermore, European wineries would experience challenges as tariffs affect their access to the U.S. market, leading to potential declines in exports. The issue of timing regarding any proposed tariffs looms large, especially with the 2025 shipping season approaching. Uncertain tariff schedules could complicate the financial landscape for importers with shipments already en route. Domestically produced wine is not immune to the reverberations of tariffs, either. A significant share of the wine bottle supply is imported, and increased costs could emerge from tariffs on these materials, affecting production costs across all price tiers. Major wine organizations have taken steps to raise awareness of the detrimental effects of tariffs on the domestic wine industry. Advocacy groups urge stakeholders to communicate the potential harm these tariffs could inflict on U.S. businesses and encourage lawmakers to reconsider policies that inadvertently harm homegrown industries. As speculation persists, industry leaders advocate for preparedness rather than panic. While the past tariffs were painful, Michas notes that there is still a desire for constructive dialogue as the administration formulates its approach to trade. For now, the industry must focus on maintaining open lines of communication with policymakers, preparing for challenges, and promoting domestic resilience and adaptability in the face of uncertainty. About the Author: Chris Lehoux Meet Chris Lehoux, an experienced wine connoisseur and dedicated blogger with a deep passion for all things wine-related. With years of expertise in the industry, Chris shares insightful wine reviews, valuable wine tasting tips, expert pairing advice, and captivating tales of vineyard visits. Join Chris on a journey through the world of wine, where every sip is an adventure waiting to be savored! Wine