U.S. Becomes the World’s Largest Wine Importer, Purchasing 1.2 Billion Liters Annually
The tariff war has now reached the liquor industry. The European Union (EU) has imposed a 50% tariff on American whiskey, while the U.S. is considering a retaliatory tariff of up to 200% on European alcoholic beverages. This trade dispute could impact an estimated $7.8 billion in commerce.
Trump Threatens 200% Tariff on European Wine
A new industry is now caught in Donald Trump’s ongoing tariff war. The U.S. president announced that he might impose a tax of up to 200% on all imported alcoholic beverages from the European Union, including wine, champagne, and other spirits. This decision follows the EU’s move to levy a 50% tariff on U.S. whiskey imports in response to Trump’s aggressive trade policies.
The market reacted immediately, with stocks of major European liquor exporters suffering losses. Pernod Ricard, Rémy Cointreau, LVMH (producer of Dom Pérignon champagne and Hennessy cognac), and Davide Campari-Milano NV (maker of Aperol Spritz) all saw declines in their stock prices.
Trump criticized the EU, calling it “one of the most hostile and abusive tariff authorities in the world,” accusing it of taking advantage of the United States. He labeled the 50% tariff on bourbon as “unacceptable retaliation.”
If the U.S. goes through with the 200% tariff on European wine and the EU maintains its 50% tariff on whiskey, the trade volume affected would amount to nearly $7.8 billion, according to data from Spain’s Interprofessional Wine Organization (OIVE) and the Distilled Spirits Council of the U.S. (Discus).
Impact on the Wine and Spirits Industry
The U.S. is the world’s largest wine importer, purchasing 1.2 billion liters annually, surpassing the UK, Germany, and China. France, Italy, New Zealand, and Spain are the top wine exporters to the American market.
José Rafael Arango, a wine industry expert, warns that “the wine sector is very sensitive to tariffs and taxes because competition is fierce and profit margins are small.” He also noted that spirits producers have larger margins and financial backing to withstand such economic shifts, unlike winemakers.
This situation could benefit the U.S. wine industry, as domestic producers may see a surge in demand due to higher prices on European imports. However, European winemakers are expected to suffer significant losses in one of their most crucial markets.
Wider Economic Ramifications
- The EU-U.S. liquor trade relationship has been operating on a zero-tariff agreement since 1997.
- Industry leaders are urging both governments to return to a tariff-free trade agreement to protect jobs and businesses on both sides.
- British liquor producers (like Diageo), which are not part of the EU, might benefit if they avoid U.S. tariffs while European competitors struggle.
