US trade tariffs will affect wine imports

America’s trade war is in full swing, with tariffs on all wine imported into the U.S. rising between 10% and 30%. These tariffs will significantly impact the availability of wines in the U.S. market.

For years, Californian growers have struggled to compete with European producers at the entry level. However, with a 20% tariff now imposed on all EU wines, many budget-friendly European options will be priced out of the market, making way for entry-level U.S. wines.

Super-premium investible European wines will also face challenges. The use of bonded warehouses may help mitigate the impact, but with U.S. regulations limiting storage in these warehouses to just five years, traders may opt to keep stock in Europe instead.

New Zealand, the third-largest wine supplier to the U.S., primarily exports premium wines. With only a 10% tariff, its wines will be relatively protected, especially as overall wine prices in the U.S. rise.

Australia, Argentina, and Chile—ranked fifth, sixth, and seventh among U.S. wine suppliers — export wines that range from mid-priced to premium. With a 10% tariff, mid-priced wines will be more affected than premium ones. However, the reduced competition from the EU and rising U.S. wine prices, may help them maintain their market share.
South Africa, facing the highest tariff at 30%, exports very little wine to the U.S., focusing instead on the UK and European markets. With these new tariffs, exports to the U.S. will likely dwindle even further.

The biggest winners will be U.S. wineries, which, with less price competition, will be able to charge more for their wines. Bulk wine producers, in particular, are set to benefit. Large multinational wine businesses that both import and export will also have an advantage, as they can utilize the duty drawback system. This scheme allows an importer to reclaim duties paid on an imported product if they export a similar product.

On the other hand, the biggest losers will be Italian and French restaurants, which have traditionally paired their regional wines with their cuisine. U.S. wine consumers will also take a hit, facing higher prices and a reduced selection of wines to choose from.