Threatened wine tariffs start to bite
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The mere threat that the U.S. will impose massive tariffs on E.U. wine has already caused some importers to pause their shipments.
Why it matters: If the tariffs go into effect and the pause becomes permanent, it could devastate a wide range of U.S. businesses.
Driving the news: President Trump has framed the proposed tariffs as a response to E.U. duties on U.S. whiskey.
- Europe has now pushed back those whiskey tariffs by 12 days, to April 13, while emphasizing that it "continues to be ready to engage in constructive dialogue," E.U. spokesperson Olof Gill said in comments to the BBC.
- At the same time, the U.S. Wine Trade Alliance has urged members to halt all E.U. wine shipments, and members including Skurnik Wines & Spirits, an important U.S. importer, have done exactly that.
Between the lines: The clear hope, from both the E.U. and the USWTA, is that at some point in the next couple of weeks the two sides will be able to come to some compromise.
- USWTA President Ben Aneff, for one, is convinced that the U.S. Trade Representative now understands the domestic impact of wine tariffs, which wasn't the case when the Trump administration imposed 25% tariffs in 2019.
- Thanks to the U.S. three-tier system of alcohol distribution, he tells Axios, "if you buy a glass of European wine for $10, nine of those 10 dollars are staying with small businesses in the United States. We only send $1 to Europe."
Follow the money: "We import about $4.5 billion of wine from the E.U.," Aneff says, "and that generates $25 billion worth of revenue in the U.S.," across importers, distributors, retailers and restaurants.
- "We rely on the sales of these wines for our very existence. There is nothing that can plug this $25 billion revenue hole."
Where it stands: While Trump claims the tariffs would benefit the domestic wine industry, the domestic wine industry disagrees.
- The Wine Institute, which represents California winemakers, says "these tariffs will only hurt the broader wine sector including farmers, vintners, distributors, retailers and the millions of people working across the extended wine supply chain."
- Similar statements have come from the National Association of American Wineries and the Toasts Not Tariffs coalition, which represents a broad range of U.S. beverage alcohol businesses.
How it works: So far there's no indication from the Trump administration that there will be any carveout from tariffs for goods that are already in transit from the E.U. to the U.S.
- Smaller companies simply don't have the money to pay a 200% tariff when a shipment arrives, which means they would go out of business.
- In 2019, during the last round of wine tariffs, multiple distributors went out of business, and many domestic wineries lost representation in many states.
The bottom line: For the time being, hope and fear are roughly evenly balanced.
- But in a world where wine shipments can already take months to arrive, given French port strikes, it's hard to plan a business around tariffs that come on and off at the speed of Trump.
