As Europe’s winemakers brace for potential triple-digit tariffs from Washington, the question on both sides of the Atlantic is whether this trade war will throw California’s wine country a lifeline – or deepen its own crisis.
A Market on the Brink
The United States remains the world’s largest wine-consuming nation, drinking over 4.3 billion bottles annually, with imports accounting for 30-40% of that volume. For European producers, the US is a crucial market, worth nearly EUR 5 billion in annual exports. However, even before any new tariffs officially take effect, the EU wine industry warns that a de facto market freeze is already in motion. With importers halting shipments, EU producers estimate they are losing EUR 100 million per week.
The alarm was raised after former US President Donald Trump threatened tariffs as high as 200% on European wines, champagnes, and spirits in response to EU levies on American bourbon. The US Wine Trade Alliance (USWTA), which represents a broad spectrum of the wine supply chain, responded swiftly, urging members to "STOP ALL WINE, SPIRITS AND BEER SHIPMENTS FROM THE EUROPEAN UNION."
USWTA President Ben Aneff cautioned that there was “no guarantee of an exception for goods in transit at the time of a tariff enactment.” As a result, uncertainty looms large for the industry on both continents.
California’s Cautious Optimism
Some see a silver lining in the crisis. California, which produces around 80% of American wine, stands to benefit if consumers shift toward domestic options due to higher European wine prices. Natalie Collins, President of the California Association of Winegrape Growers (CAWG), described the situation as both "a challenge and an opportunity."
“If the tariffs increase the price of European wines, we could see an opportunity for California wines to be favored,” Collins noted, though she also pointed out that EU producers enjoy stronger public support and subsidies than their US counterparts.
Yet, California winemakers are grappling with their own problems. The state is facing an oversupply crisis, exacerbated by declining wine consumption, particularly among younger generations. Since 2022, California growers have pulled up over 26,000 hectares of vines, with experts suggesting another 50,000 hectares need to be removed to rebalance supply. The EU is facing a similar crisis, with governments offering subsidies to uproot vines.
Rob McMillan, founder of Silicon Valley Bank’s wine division, described the situation as “unprecedented,” with some of the finest Napa and Sonoma growers struggling with excess inventory. Compounding the problem, US wines are already losing market share in Canada due to a boycott sparked by strained US-Canada relations.
The Global Wine Industry at a Crossroads
Tariffs on European wines could theoretically help US growers clear out surplus inventory and close loopholes that allow blending foreign grapes into “American wine.” However, experts warn that tariffs could instead fuel inflation, disrupt global supply chains, and trigger retaliatory measures against US wine exports.
Nicola Tinelli of Italy’s Unione Italiana Vini (UIV) warned that the US accounts for 25% of Italian wine exports, amounting to EUR 2 billion annually. Most of these wines—98%—are priced under EUR 13.80 (USD 15). If tariffs send prices soaring, Tinelli fears consumers will simply stop buying wine altogether rather than substitute it with local alternatives, accelerating the global decline in wine consumption.
With so much at stake, European winemakers and spirits producers are lobbying intensely to keep wine out of the tariff war. Italy, France, and Ireland have pushed for an exemption, recognizing that counter-tariffs on the EUR 250 million worth of US wine exports to Europe would be unlikely to deter Washington. Ignacio Sanchez Recarte, Secretary General of the European Committee of Wine Companies (CEEV), noted that most US wine exports originate from California—a Democratic stronghold—meaning political considerations could also play a role in the final decision.
A Fragile Future for the Wine Industry
Collins insists that there is room for “all wines” in the US market, but believes domestic producers deserve a fairer chance to compete.
“The livelihoods of American families, local communities, farm-workers, tourism, and allied industries depend on it,” she emphasized.
Whether the looming trade war ultimately reshapes global wine markets or merely adds another burden to an already struggling industry remains to be seen. For now, producers on both sides of the Atlantic are holding their breath, hoping that wine will be spared from the latest round of economic crossfire.
Source: EurActiv