Global alcohol markets experience the ripple effects of Trump's tariffs, impacting both bourbon and wine industries.
In a recent discussion on a popular talk show, Ben Aneff, President of the U.S. Wine Trade Alliance, shed light on the economic outlook for the wine industry, particularly in the face of tariffs.
The U.S. wine industry has been significantly impacted by tariffs, especially those affecting imports from the European Union. European wines account for a substantial portion of the American wine market, contributing 75% of the revenue in American wine distribution. In 2024, the U.S. imported wine worth $5.3 billion, generating a staggering $23.96 billion in revenue and creating a trade surplus of nearly $19 billion.
The transatlantic wine trade is crucial for American jobs, supporting the livelihoods of millions working in wine production and the hospitality sectors. The U.S. Wine Trade Alliance emphasises that wine is not the problem but rather a success model that benefits the U.S. economy.
However, the potential imposition of a 30% tariff on EU spirits, including wine, could have severe consequences for the U.S. economy and American jobs. A 30% tariff would severely impact the transatlantic trade, displacing many EU wines from the U.S. market. This could lead to a loss of revenue that supports American trade and workers, weakening the U.S. economy.
The wine trade is a significant employer in the U.S., with millions of jobs dependent on the vibrant international trade in wine. Increased tariffs could jeopardize these jobs by reducing the demand for imported wines. Consumers in the U.S. would likely bear the brunt of higher tariffs as prices for wine and spirits increase, potentially reducing sales and affecting both retailers and consumers.
Despite these challenges, there is optimism that negotiations might lead to a resolution favourable to both parties. The EU wine sector and U.S. trade associations are pushing for wine to be exempt from tariffs, emphasising the mutual benefits of the trade.
The European Union, America's top client for U.S. spirits imports, imported approximately $1.2 billion in 2024. The U.S. benefits from a $19 billion economic surplus from the sale of imported wine from the EU, which helps support hundreds of thousands of American jobs.
The booze business is highly regulated, globally entangled, and culturally significant. In 2021, the U.S. exported $2.4 billion in hard alcohol, with the Bluegrass State (Kentucky) producing 95% of the world's bourbon, employing more than 23,000 workers, and generating a cool $9 billion annually.
Chris Swonger, president and CEO of the Distilled Spirits Council of the United States, has urged President Trump to negotiate an agreement for zero-for-zero tariffs on spirits with the European Union. Swonger warns that a 30% tariff on EU spirits could trigger retaliatory tariffs hurting small American distilleries and farmers. The EU's retaliatory tariffs on American-made whiskey in 2018 led to a 20% decline in exports, costing the nation's spirits industry about $112 million.
As negotiations continue, both parties remain hopeful for a resolution that acknowledges the mutual benefits of their trade relationships. Aneff is hopeful that Trump can quickly come to a deal with the EU that carves wine out of any tariffs, expressing concern that losing this economic surplus could result in huge numbers of lost jobs and shrinking revenue in the industry. The EU has held back on imposing retaliatory tariffs, giving the 27-member bloc breathing room to negotiate a trade deal until Aug. 1.
- The U.S. Wine Trade Alliance believes that the wine industry, with its significant revenue generation and job creation, is a success model that benefits the U.S. economy.
- The potential imposition of a 30% tariff on EU spirits, including wine, could lead to a loss of revenue that supports American trade and workers, potentially impacting trading markets and weakening the U.S. economy.
- Pension plans and retirement savings for millions of Americans could be affected if the transatlantic trade, which provides a substantial portion of the American wine market, experiences a disruption due to increased tariffs.
