Bradley Anderson is a long-time Dallas restaurateur who has co-owned a variety of concepts over the past decade, including a wine bar and French bistro. And he pulls no punches when it comes to the newly announced Trump wine tariffs.
“These nonsensical, punitive tariffs will be hugely detrimental to the wine trade, both domestic and international,” says Anderson, who currently owns Hillside Tavern in the city’s Lakewood neighborhood with his brother Brooks. “And not to mention the restaurants will suffer along with every other cog in the trade — importers, distributors, and ultimately the customers.”
Which was pretty much the reaction throughout the US wine business on Wednesday after the news that the Trump Administration would levy what it is calling “reciprocal tariffs” of 10% on the UK and 20% on the EU. According to the president, the EU is “ripping off” the United States.
In addition, a minimum baseline tariff of 10% will apply to products from Australia, Argentina, and Chile, including wine. These three countries are key US wine suppliers.
The tariffs were less than anticipated. Many analysts had expected 25% on EU products and Trump had threatened 200% on EU wine last month. And they weren’t as high as those on China, Taiwan, Vietnam, and Switzerland, each of which was tagged with tariffs of more than 30%.
The tariffs, reported Reuters, will take effect on Saturday after complying with a few procedural requirements, though Administration officials have said Trump is ready to negotiate once that happens.
It also looks to include aluminium cans like those used in one of US wines’ few growing categories; CNN reported that brewers in both the US and Canada are bracing for higher prices.
It also leaves open the question of whether the EU, which held up on imposing €26 bn ($28 bn) in retaliatory tariffs on American goods (including whiskey), would now impose those levies. Also hanging in the balance is resumption of the 2020 tariff on some EU wines, set at 25% as part of an airplane parts dispute, and scheduled to resume next year. If it does start again, it would further hike many European wine prices.
Who benefits – and who pays?
“This may destroy three important categories in the US: Prosecco, Italian Pinot Grigio, and French rosé,” says Michael Correra, who owns Michael-Towne Wines & Spirits in New York City and is the executive director of the city’s Metropolitan Package Store Association trade group. “If the price of a $12 Pinot Grigio goes up to $15 or $17, who is going to buy it? There is really no comparable California wine to replace those with. This is what happened to [Scottish] single malt whiskey during the first round of the tariffs, and the market has never really come back.”
"Restaurants will suffer, domestic producers will face new obstacles in bringing their wines to market, and retailers, importers, and distributors across the country will be placed at serious risk. With their biggest profit center decimated, many restaurant investors will decide to take their money elsewhere," says the US Wine Trade Alliance.
Nevertheless, some in the United States, and especially in California wine country, where a sales slump started about 18 months ago, see the tariffs as a way out. Battered by a drop in demand, as well as near-record low bulk grape and bulk wine prices, they see tariffs as a way to keep less expensive imports, many from the EU, out of the US market and push US wine drinkers toward their products. Currently, imports account for between 35% and 40% of US consumption, which is about five times more than the country exports. EU wines make about three-quarters of those imports.
There is a sense that tariffs may boost US wine sales in some parts of the country’s on-premise trade, say analysts, but few see it as a panacea. For one thing, much of the US restaurant business has struggled since the end of the pandemic, and the US Wine Trade Alliance, a group of importers, restaurants, and retailers has emphasised that the losses would offset any potential benefits for US wineries. What is a French restaurant going to do without affordable French wines?
First and foremost, the tariff is about prices, says Lisa Perini, whose family-named steakhouse in west Texas is one of the state’s most famous: "Where is the point of resistance for the consumer," when it comes to raising prices? Plus, the tariff will reduce wine lists as restaurants try to pare inventory costs, and disrupt the US’ complicated, legally-mandated supply chain. In some states, importers will not be allowed to pass on higher prices caused by the new tariffs, but must absorb the increase themselves.
“Putting tariffs on wine imports is just a fundamental misunderstanding of how the US wine supply chain works,” says Michael Kaiser of the Wine America trade group, which opposes the tariffs. “It’s not foreign companies that will pay the tariff, but US companies and US consumers.”
Decades of export growth at risk in Canada
The threat of tariffs has already cost US wine producers most of its Canadian business; the country is the US’ largest export market with about 35% of the total. A spokesman for the Wine Institute trade group said further tariffs would just exacerbate the problem:
“Canada is the single most important export market for US wines with retail sales in excess of $1.1 bn annually,” said the statement. “Wine is one of the US’ most highly value-added agricultural exports, so any loss of access to the Canadian market will damage the entire US wine sector. Our wineries have spent decades building market share and brand loyalty across Canada. These actions put all of this at risk.”
As for Anderson, he says he will have to change the wines he buys for Hillside. His only consolation is that it’s not as extensive a program as he had elsewhere. Which, he says, with a sigh, isn’t much of a consolation at all.
The US is the EU’s biggest export market by far, receiving €4.88 bn ($5.19 bn) worth of EU wine.
“The announced reciprocal tariffs on EU wines will damage EU wine companies,” said Marzia Varvaglione, President of the Comité Européen des Entreprises Vins (CEEV), which represents Europe’s wine producers, adding that they will lead to layoffs, deferred investments and price increases.“The US wine market is fundamental for the economic sustainability of the EU wine sector. There is no alternative wine market that could compensate the loss of the US market.”
The wine relationship between the EU and the US is the largest wine trade relationship in the world. According to the CEEV, both wine sectors are committed to fair trade; 2020 saw the signing of the EU-US Declaration of Principles on Trade in the Wine Sector, in response to President Trump’s earlier tariffs on wine.
“The imposition of reciprocal duties on trans-Atlantic wine trade appears unjustified considering the minimal difference in duties between the EU and US tariffs on wine products,” said Ignacio Sánchez Recarte, Secretary-General of CEEV. “Together with our US colleagues, we have consistently opposed the imposition of tariffs for wine around the world and have consistently called to remove the duties applying in our markets.”
President Trump said that the 20% tariffs on goods from the EU was retaliation for what he said was tariffs of 39% placed on American exports to the EU.
„The EU, like the United States, has generally low tariffs; the average tariff it charges on US goods is less than 3%,” wrote economist Paul Krugman on his personal Substack shortly after the announcement. “So where does this 39% number come from? I have no idea.“
