How tariffs could hurt California's wine industry
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Wine from the French-inspired wine bar Verjus in downtown San Francisco. Photo: Paul Chinn/The San Francisco Chronicle via Getty Images
With the threat of massive tariffs on European wine looming, importers in California are preparing for a potentially devastating toll on the industry.
Why it matters: California bought $502 million in wine from France in 2024, second behind New York's $780 million, per the American Association of Wine Economists.
- Nationally, wine importers spent $6.8 billion last year, 80% of which went to producers in the European Union.
The big picture: If President Trump's proposed 200% tariffs on Europe were to drastically cut imports, an industry already facing financial difficulties will take a huge economic hit down the chain, affecting not only importers, but also distributors, retailers, restaurants and any business that sells imported wine.
What they're saying: "We are bracing for what could be just catastrophic to the import segment of the business," said Scott Forrest, a sales representative at Martine's Wines, a Northern California-based importer and wholesaler specializing in French wines.
- "It's very upsetting to think what it stands to do to pricing, how that will trickle down to the market and how the people I sell to will buy wine," he said.
Friction point: Tariffs levied abroad could drive up prices here, even on domestically produced wines, disrupt supply chains and "create an even narrower distribution pipeline," according to wine economist Mike Veseth.
By the numbers: California produces more wine than any other state, with about 609 million gallons made in 2023, according to data from the U.S. Alcohol and Tobacco Tax and Trade Bureau.
- "There would be even less capacity and competition, so small wine producers from Napa or Sonoma or Mendocino County, for example, would find it even more difficult to get their wines through distribution to restaurants and retailers," Veseth told Axios.
Zoom out: If Trump followed through on his threat, wine importers could see their revenue fall to near zero because after stripping out European imports, they would have almost nothing to sell.
Threat level: Due to the risk of tariffs being "too high," the U.S. Wine Trade Alliance, an industry trade group, is advising American companies to halt all shipments of wine, spirits and beer from the E.U.
Between the lines: Consumers could also certainly bear the cost. A $20 bottle might end up costing $60, for example, Veseth noted.
- Such an extreme markup would not only kill demand for European wine, but it would also "put a lot of companies out of business — plain and simple," Forrest predicts.
Case in point: Even much smaller tariffs have the potential to severely hurt the industry — 25% tariffs imposed in 2019 resulted in French wine imports falling by 54% and German imports by 42%.
Reality check: The threat of tariffs of such magnitude have been described by White House officials to Axios as a negotiating tactic rather than an attempt to kill an entire industry.
- French politicians are already suggesting walking back the proposed tariff on U.S. whiskey, which initially triggered Trump's response.
The bottom line: If the tariffs are imposed, they would be so large, according to industry insiders, that the wine sector would likely opt to wait them out rather than pay them — or face ruinous long-term economic consequences.