Wine Businesses Fear Disaster in Threat of Huge Tariffs

It’s not clear who will benefit if President Trump follows through on his threat to impose 200 percent tariffs on all wines and alcoholic beverages from the European Union, but it certainly would not be American consumers.

The tariff warning was posted by Mr. Trump on social media Thursday in retaliation to 50 percent tariffs on American whiskey and several other products announced by the European Union, which were themselves a response to a set of U.S. tariffs that took effect last week.

Mr. Trump said in his post that tariffs “will be great for the wine and Champagne businesses in the U.S.” But American wine producers don’t necessarily see it that way.

“On the surface, it may look like a boon, but if you look underneath, I think you realize it’s really damaging to our industry at a time when we really don’t need this,” said John Williams, the proprietor of Frog’s Leap, a family-run wine producer in the Napa Valley.

For most wine producers, sales depend on an interconnected web of small businesses — distributors, retailers and restaurateurs among them — that also depend on the sales of European wines.

“I don’t think people realize how much the wine infrastructure relies on European sales,” said Chris Leon, owner of Leon & Son, a wine retailer in Brooklyn, N.Y. “If you deplete those funds from the equation, you reduce the opportunity to buy wines from other places. You’re not just hurting European wines, you’re hurting the chances of Americans to buy American wines.”

The American wine industry is already experiencing difficulties. Sales are down. wineries are closing, public-health advocates have suggested that any consumption of alcohol is unhealthy, and climate change has caused catastrophic fires, spring frosts and droughts. Meanwhile, tariffs that Mr. Trump has placed on Canadian and Mexican goods have already affected American producers like Frog’s Leap that depend on export markets in those countries.

“Ontario was our largest trading partner,” Mr. Williams said. “They’ve canceled all orders, including bottles that had already been specially labeled for the province. We’ve all been waiting for the next natural disaster. I see this as an unnatural disaster.”

Some businesses, like Demeine Estates, an importer based in St. Helena, Calif., have tried to anticipate the arrival of tariffs by stockpiling certain European wines in advance of any additional costs.

“We doubled in some cases, in some we increased by 20 percent and in some we were conservative,” said Philana Bouvier, the president of Demeine. “You can’t do it for everything, because then you get stuck with inventory. You have to forecast correctly, and time will tell if we did.”

A few larger wine businesses seem less concerned than most. Louis Roederer, the Champagne producer, has made sparkling wine in the United States for 40 years at Roederer Estate, based in Mendocino County in California. In the last decade, Roederer has further diversified its portfolio by buying well-known California producers like Merry Edwards Winery in Sonoma County and Diamond Creek Vineyards in Napa Valley.

“If indeed there are some very high tariffs, it will hurt our European wine businesses, but our California businesses would benefit,” said Guillaume Fouilleron, the president and chief executive of Roederer USA.

Roederer has two advantages, though. It owns its American distribution arm, Maisons Marques & Domaines, and it has the corporate financial power to weather a prolonged disruption in the global wine business.

Small businesses are much more vulnerable.

“These tariffs, if they are enacted, would absolutely shatter beloved businesses in every city in America,” said Ben Aneff, the managing partner of Tribeca Wine Merchants, in New York City, and president of the U.S. Wine Trade Alliance, which works to ensure a free-trade environment for wine. “You cannot overstate how much restaurants depend on the revenues generated from these products.”

It’s hard to imagine trattorias without Italian wines or Spanish restaurants selling New Zealand sauvignon blanc. But for many restaurants, it would either be that or raising prices drastically on European wines.

Back in 2019 during his first term, Mr. Trump imposed 25 percent tariffs on certain European foods and beverages, which posed major difficulties for American wine businesses until the fees were lifted by President Joseph R. Biden Jr. in 2021.

“We hobbled through,” said Doug Polaner, who runs the importer and distributor Polaner Selections with his wife, Tina, in Mount Kisco, N.Y. “It certainly had an effect on our bottom line, but 200 percent? That’s a nonstarter. For now, we’d have to pause any shipments coming from Europe to figure out what’s going to happen.”

Of particular concern are containers of wine that are already in transit, the so-called “goods on the water.” If they arrive before any tariffs are imposed, no problem, but if they arrive after tariffs begin, importers will be faced with huge fees.

Jeff Kellogg of Kellogg Selections, which distributes imported and domestic wines in the Carolinas, Virginia and Washington, D.C., said he had containers of wine scheduled to be loaded in France, but received a message from the shipper on Thursday saying that the loading would be delayed a week to give importers an opportunity to consider their options.

“We might stop buying European wine until we get some clarity,” Mr. Kellogg said. He added that he would be compelled to raise prices on American wines, as he did during the last round of American tariffs.

“It was for the sake of our business,” he said. “If we can’t sell European wines anymore, we’re dropping sales reps, drivers and others. It wouldn’t be the same business.”