At TWM we are not political and this post is not a criticism of the current administration, just a statement of facts of how the new tariffs imposed by President Trump could effect your wine buying in the future. Of course this is all subject to change if the policies are suddenly reversed, but for now our approach to buying will be to assume the tariffs are permanent.
First, let’s start with the amount being assessed per wine producing country to give you some perspective.
30% – South Africa
20% – European Union – France, Italy, Spain, Germany, Austria, Greece, Portugal, Slovenia…
10% – England, Argentina, Chile, New Zealand, Australia, Uruguay
During the campaign President Trump spoke favorably about tariffs so once the election was over many distributors and importers began stocking up. That all ended in late March when many halted shipping of imported wines, concerned that when tariffs were announced on April 2nd they would be immediate. This happened when President Trump imposed tariffs on wine in 2019, causing many importers an economic hardship as containers already in transit were suddenly levied. This time there is a very short grace period, so wines in transit are not subject to the full tariff.
As a result of their planning most of our distributors, and some importers, have several weeks, or months supply in their warehouses already. However, it is safe to assume that they will probably raise their prices before those goods are exhausted. In part to offset their higher holding costs and to lessen the blow when the new tariffed goods arrive and prices inevitably rise. I also feel that many will want to test the waters of higher prices to determine what, and how much, of some items should be re-ordered.
It is also important to understand that the tariffs will cause price increases on domestic wines as well. Reciprocal tariffs already imposed by Canada and China will cause prices on chemicals for farming, equipment and inputs such as glass bottles, cardboard boxes, labels and closures to increase. Additionally, US producers have been feeling the effects of declining consumption so prices have been soft, often unprofitable. The import tariffs now give domestic wineries the potential to raise their prices too, in part to offset rising costs, but in some cases to reach profitability. I also spoke with one distributor who is raising their prices on domestic wines to help lessen the blow on their imports.
So, how should you approach wine buying in the near and mid term? For those who drink everyday wines, such as Côtes du Rhône, Montepulciano d’Abruzzo or even Marlborough Sauvignon Blanc, you have some flexibility. Wines with less demand and greater supply will likely not rise the full 20%, at least for now. Producers, importers, distributors and retailers all recognize these wines will not sell if too expensive so each tier will likely shave margins to help offset the difference. If you are a fan of specific categories or brands of imported wine, such as French Burgundy or Sancerre, Italian Brunello and Barolo, then you would be smart to add extra to your orders over the coming weeks. These wines are expensive enough already and due to small supply and big demand they will sell out. There is also little interest in the supply chain working on smaller margins since the demand will likely remain strong even with tariffs.
I will end with this thought: There is a saying in the wine business that people, “drink when they are happy, and drink when they are sad.” Everyone is going to feel the effects of tariffs so sharing a bottle with friends and those you love will help ease the pain. Together we will get through this and enjoy many great bottles in the future.