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The landscape for European wines in the United States is facing significant challenges.
President Donald Trump recently issued a warning regarding the imposition of a potential 200% tariff on imports of European wine, Champagne, and spirits if the European Union proceeds with a proposed 50% tariff on American whiskey. Wine importers and distributors have voiced concerns that such a dramatic tariff could devastate the European wine market in the U.S.
Ronnie Sanders, CEO of Vine Street Imports in New Jersey, expressed skepticism about whether American consumers would accept paying two to three times the price for their preferred wines or Champagnes.
Jeff Zacharia, president of Zachys wine retailer in Port Chester, New York, noted that approximately 80% of his inventory consists of European wines. He cited a crucial reliance on these imports for business operations, remarking that there isn’t sufficient domestic wine to fill the void should importation be severely restricted.
Zacharia emphasized the potential adverse effects on the broader American wine industry, including local wineries.
He also mentioned the uncertainty surrounding the tariff situation has led him to halt purchases of European wines until a clearer picture emerges. “Our operational strategy will greatly differ depending on whether the tariff is set at 200%, 100%, or 10%,” he stated.
European wine and spirits constituted 17% of total alcohol consumption in the U.S. in 2023, with Italy contributing 7%—primarily from wines—and France accounting for another 5% through its wine, cognac, and vodka exports.
The U.S. has a larger alcohol import market than export one, with the 2022 value of imported alcoholic beverages hitting $26.6 billion, accounting for 14% of all agricultural imports, as reported by the U.S. Department of Agriculture. In contrast, U.S. exports of beer, wine, and distilled spirits were valued at $3.9 billion that same year.
Marten Lodewijks, president of IWSR U.S., stated that while a 200% tariff would be unprecedented, such duties are usually more selectively applied.
In a similar context, he recounted how in 2020, China enforced tariffs exceeding 218% on Australian wine, leading to a drastic decline in exports by 90%. Although these tariffs were lifted last year, the repercussions for Australia’s wine industry were severe, which previously enjoyed an annual trade value of 1.1 billion Australian dollars ($710 million) in China.
The EU’s intended tax on American whiskey will take effect on April 1, a move initiated as a response to previously implemented U.S. steel and aluminum tariffs.
In response to the EU’s actions, Trump stated on social media, “If this Tariff is not removed immediately, the U.S. will shortly place a 200% Tariff on all WINES, CHAMPAGNES, & ALCOHOLIC PRODUCTS COMING OUT OF FRANCE AND OTHER E.U. REPRESENTED COUNTRIES. This will be great for the Wine and Champagne businesses in the U.S.”
However, his assertion concerning champagne production was misleading. Champagne is designated as a specific product from France’s Champagne region, though there are U.S. wineries, including Trump Winery, owned by Eric Trump, that produce sparkling wines.
Reactions from European officials were rapid and critical.
Ettore Prandini, president of Italy’s Coldiretti agricultural lobby, emphasized the need to prevent escalation into a global trade war, noting it would adversely affect U.S. consumers and farmers.
Italian wine exports to the U.S. have notably increased over the past two decades, currently valued at 1.9 billion euros ($2.1 billion). Meanwhile, the American market for French wine and spirits stands at around 4 billion euros ($4.3 billion) annually.
Gabriel Picard of the French Federation of Exporters of Wines and Spirits warned that a 200% tariff would be catastrophic for the French alcohol export sector, potentially displacing hundreds of thousands of jobs.
He stated, “Not a single bottle will continue to be expedited if 200% tariffs are applied to our products. All exports to the United States will come to a total, total halt.”
Some shipping entities, like French transporter Grain de Sail, which employs sail power for transatlantic deliveries, reported that certain winemakers had already begun to cancel shipments in anticipation of the tariff announcement.
According to co-founder Jacques Barreau, “It has more or less frozen exports. There’s no point even hoping to send wine to the United States under these conditions.”
Meanwhile, some U.S. wine retailers attempted to turn the potential crisis into an opportunity. In Washington, the wine bar Cork promoted a tariff sale, urging customers to purchase their favorite wines before prices potentially soar.
Speculations arose about whether Trump would actually enforce a 200% tariff. Mark O’Callaghan, founder of Exit 9 Wine & Liquor Warehouse in New York, remarked, “It changes by the hour now, right?” His store relies on European wines for approximately 35% of its sales.
Others chose to maintain a low profile amid the escalating tensions. Total Wine, with 279 stores nationwide, did not respond to inquiries. Similarly, Southern Glazer’s Wine & Spirits, a major alcohol distributor, also withheld comments.
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Contributions to this report came from multiple journalists covering events from various locations, reflecting a wide array of perspectives on this evolving situation.
Source
www.yahoo.com