What could Tariffs do to the wine & Spirits Industries?

As we go to press this month, the current federal administration in the United States is poised to initiate crushing tariffs on imported products critical to the wine and beverage industry. Among these are tariffs on imported wine and spirits, agricultural products including fruits and grains, and steel and aluminum. Other nations, in response to the U.S. government’s moves, have threatened heightened tariffs of their own.

The most frequent question I get since this began is, What do I think all of this means for the future? The answer is clear. None of this is good for the wine and beverage industries, both in the U.S. and globally, which have yet to fully recover from a global pandemic, a downturn in wine consumption across the world, and global inflationary pressures on everything that impacts the bottom line of these industries. Add to this, the critical role that immigrant labor plays in the viticultural sector - and the situation only worsens.

Esther Mobley, the San Francisco Chronicle’s wine writer, recently wrote about the hoarding of champagne and other wine imports ahead of the imposition of tariffs.

My friends at The Vinho, an importer of small producers from Portugal, alerted their customers that their last shipment had arrived in port in New York ahead of any new tariffs, but they had no plans for further orders until things settled down.

Several industry articles recently underscored that there is such a glut of wine grapes, that, last year for example, Zinfandel grapes in California couldn’t be given away and, instead, withered on their vines. We have reported in these pages on growers in France who turned grapes into ethyl alcohol.

For canned beverage producers, the cost of aluminum in the current uncertainty has them apoplectic. They’ve been buying as much as they can in advance, but that has resulted in a scarcity of product, and a return to glass bottles for beer distribution. Barley from Canada, said one craft beer producer, could rise so much with the new tariffs that a six pack of their beer could increase to $18.99 and the cost of pints in their tasting room increase from $8 to $12.

None of this is good for the industries and none of this is good for consumers who will ultimately pay a higher cost for products, or worse, forgo them altogether. That cascade of disaster impacts untold parties, and it is global in scope.

It feels dire as hell, because a prolonged and multi-faceted trade war is just that - dire.

Will the wine industry disappear? Of course not. It has survived millennia, plagues, and human follies of every sort - including the folly the current situation portends. But that doesn’t soften the blows that are likely imminent, and it doesn’t mean the impact won’t be disastrous.

We can’t sugar coat this one and can only hope that in the end, the bluster and capitalistic positioning will be brief.

As always, Salud!