Former President Donald Trump’s potential imposition of a 200% tariff on European wines in retaliation for tariffs on American whiskey has sparked significant concern within the wine industry. Stakeholders, including the Federation of Wine and Spirit Exporters, fear a trade war could devastate exports to the U.S., a crucial market projected to generate €3.8 billion in 2024. Exporters are already facing economic challenges, and the looming tariffs add uncertainty, complicating their ability to navigate international markets.
Trump’s Tariff Threats and Their Impact on European Wines
In mid-March, former President Donald Trump issued a stern warning to France and the European Union, indicating that he might impose a staggering 200% tariff on European wines and spirits. This potential action is a direct response to the recently established 50% tariffs on American whiskey in Europe. The specifics of these tariff increases are set to be unveiled on April 2, during an event Trump has dubbed ‘Liberation Day.’ This looming prospect has sent shockwaves through the wine industry, as the United States remains a vital export market for many European producers.
Concerns from the Wine Industry
Across the Atlantic, the professional association representing spirit producers and distributors has voiced its concerns, urging President Trump to negotiate an agreement that would revert tariffs to zero. They argue that such a move would greatly benefit the hospitality sector and American craft distilleries reliant on exports. This sentiment is echoed by many French stakeholders in the industry, who fear the ramifications of a trade war initiated by the White House.
Gabriel Picard, president of the Federation of Wine and Spirit Exporters (FEVS), expressed grave concerns, stating that increased tariffs could halt exports of wines and spirits to the United States entirely. He emphasized the significance of the U.S. market, noting that it is expected to generate 3.8 billion euros in exports in 2024, which accounts for a substantial 25% of the sector’s total exports.
With over three decades of experience in exporting French wines and spirits, Hesiode positions itself as an ‘ambassador of French viticulture internationally.’ Michaël Sourice, the general director, shared his anxiety about Trump’s impending announcements regarding tariffs. He highlighted the popularity of French wines like Sancerre and Chablis in the U.S., alongside esteemed red wines from Bordeaux and Burgundy, cognacs, and champagnes—all at risk due to potential tariff hikes.
While Hesiode primarily focuses on trade with Japan, Sourice remains vigilant about the U.S. market’s fluctuations. He has observed a growing reluctance among buyers who fear that substantial taxes will be levied on imported goods. With catalog prices fixed, any tax increases could lead to significant financial losses for importers, contributing to their hesitancy in making purchases.
Further complicating matters, exporters are already grappling with a challenging economic landscape. The rise in operational costs has been exacerbated by the near shutdown of the Chinese market, which has seen minimal imports since the pandemic. Japan, too, presents difficulties, with its market suffering from the deflation of the yen, leading to increased expenses for exporters.
While some exporters reported record sales in the U.S. earlier this year, fueled by preemptive purchases to mitigate potential cost increases, others remain cautious. Sourice noted that while building inventory can be beneficial, it is a temporary solution, as stocks will eventually dwindle, leaving businesses to face the original challenges once again.
Despite the sluggish international trade in wines and spirits, the imminent changes in U.S. tariffs present new hurdles. Expanding into new markets is a daunting task, with no guarantees of long-term success. Sourice remarked that establishing trust and relationships in new markets is a lengthy process, highlighting the uncertainty that exporters face in the current climate.