How High Will Tariffs Go on Imported Wine?

Prices for many imported wines are about to go even higher. President Donald J. Trump’s new higher tariff rates for many nations went into effect just after midnight on Thursday, Aug. 7. And that means that prices will likely rise on many popular wines on U.S. stores shelves. How high will they go? That’s a lot less clear.

Which foreign wines are facing higher tariffs?

Since April 9, the White House has imposed a baseline tariff rate of 10 percent on goods from most nations, including such leading sources of wine as the European Union, Chile, New Zealand and Australia. Several of those nations faced even higher tariffs, but the President paused the higher rates until now to allow for the U.S. and foreign governments to negotiate new trade deals. Some nations succeeded. Just last week, the European Union and the U.S. announced a preliminary trade agreement.

Those deals have not ended the tariffs, however. Goods from every nation still face a minimum 10 percent tariff. And many face even higher duties. That trade deal with the E.U.? It merely lowers the tariffs taking effect Aug. 7 on wines from such leading producers as Italy, France and Spain from a threatened 30 to 50 percent to 15 percent.

And some nations that have not secured deals face even higher duties. Most significant among major wine exporters is South Africa—goods from that nation will be tariffed at 30 percent. Meanwhile, Israel and New Zealand face 15 percent tariffs, while Argentina, Chile and Australia’s wines will all be taxed at 10 percent.

Is There a Chance More Deals Are Coming?

Yes. Even many of the existing deals are not set in stone just yet. Negotiators from the E.U. and U.S. are still talking over details of that agreement, and one major sticking point is which industries will be exempted from the tariffs. E.U. nations are lobbying hard for wine and spirits to be excluded from the tariffs. E.U. leadership announced this week that they would hold off on retaliatory tariffs on American goods for six months while the negotiators continue to talk.

Toasts Not Tariffs, a coalition of wine and spirits trade groups, issued a letter lobbying the White House to come to an agreement exempting wine and spirits, arguing that American importers, retailers and restaurants will suffer from the tariffs. “Without productive negotiations reducing reciprocal tariffs on wine and spirits, American wine retailers anticipate a significant decline in sales on top of the already difficult market, as well as significant job losses and subsequent business closures,” said Tom Wark, executive director of the American Association of Wine Retailers, part of the coalition, in a statement.

Could There Potentially Be More Tariffs?

One thing the administration has made clear is that more tariffs are always on the table. Just this week, Trump announced an additional 25 percent tariff on Indian goods will go into effect in three weeks, in retaliation for India buying Russian oil. That’s on top of the 25 percent tariffs that take effect this week.

If the E.U. and U.S. cannot come to an agreement on exemptions, expect Brussels to pass retaliatory tariffs in six months—Bourbon could be a prime target. And that could induce Trump to raise tariffs even higher.

Ok, But If I Buy A Bottle of Burgundy, France Is Paying The Tariff, Right?

Nope. While Trump has long claimed that foreign companies pay tariffs, that’s almost never the case. The new tariffs will effectively function as a 15 percent sales tax on your wine. When the wine arrives in U.S. ports, the importer must pay the tariff to get the wine out of customs. So a bottle they paid the winery $20 for now costs them $22.50. As the wine goes through a wholesaler and then a retailer or restaurant, they all add their markups. When that wine arrives on store shelves, it’s probably gone from $40 retail to $45. Higher markup at restaurants means it will be even pricier.

Some wineries and importers have been swallowing some of that cost in order to keep their customers. One reason they did so was because it was unclear how high the final tariffs would be. But if Trump plans to keep 15 percent tariffs in place for a long time, importers are going to have to pass along more cost or face going bankrupt. Foreign wineries are going to begin looking for other markets to sell to. Potentially, the U.S. will lose some of the diversity of wine selections that makes its market so dynamic.

And here’s another wrinkle—the dollar has been losing value since the trade wars began. On January 12, $1 was worth €0.98. As of July 27, it had fallen to €0.85. That exchange rate is effectively making European wines another 10 to 15 percent more expensive to American consumers.

What about legal challenges to the tariffs?

On May 28, a three-judge panel at the U.S. Court of International Trade, a federal court in Manhattan, ruled that the tariffs that Trump had imposed by citing emergency economic powers were unconstitutional. A small New York-based wine importer—VOS Selections—is the lead plaintiff.

Normally, Congress can enact tariffs or the executive branch can impose targeted tariffs after an investigation. During his first term, Trump imposed several tariffs, including 25 percent tariffs on Spanish, French and German wines, after investigations by the U.S. Trade Representative. But in his second term, Trump has relied on a 1977 law called the International Emergency Economic Powers Act (IEEPA), which does not specifically mention tariffs. “IEEPA does not authorize any of the worldwide, retaliatory or trafficking tariff orders,” the panel of judges said in their order on May 28. “The worldwide and retaliatory tariff orders exceed any authority granted to the President by IEEPA to regulate importation by means of tariffs.”

The administration has appealed, and the ruling is on hold while the case works its way through the courts. The Supreme Court could eventually be asked to rule. If the President’s claim that he can use IEEPA is rejected, the tariffs would be lifted. Businesses that paid them could also be reimbursed.

Barring that, will these tariffs be in place for a long time?

It’s unclear. Members of the administration have outlined two, somewhat conflicting, goals for the tariffs. Short-term, they hope the duties will force other countries to enter negotiations and lower barriers to American products in return for tariff relief. But they also speak of keeping the tariffs in place long-term, as both a source of revenue and to encourage companies to base operations and build factories in the U.S.

Trump has repeatedly shown that he’s willing to negotiate, but he’s also been firm that some tariffs will remain in place. During the 2024 presidential campaign, many economists claimed a 10 percent tariff on all exported goods would be a drastic measure. But now it looks like that baseline tariff—and many higher duties—are here to stay.

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