The wine industry is among numerous sectors trying to navigate the evolving landscape of tariffs instituted by President Donald Trump, which have seen significant changes in recent weeks.
On March 13, Trump threatened to impose a staggering 200% charge on all wines, champagnes, and alcoholic products imported from the European Union, a key player in wine exports to the U.S.
Subsequent to this threat, he announced a blanket 10% tariff and higher individualized rates targeting specific countries, with the EU facing an increased 20% tariff.
On Wednesday, however, Trump paused the implementation of country-specific tariffs for a duration of 90 days, further complicating the situation for those involved in the wine supply chain.
Given the varying tariff rates, businesses in the industry are likely to either absorb the increased costs or pass them on to consumers.
This predicament is particularly daunting for companies already functioning on razor-thin profit margins.
Pat Hiley, the director of global wine operations for importer Integrity Wines, noted, “You don’t become millionaires in this industry.
You live richly, but you don’t get rich doing it.”
In anticipation of looming tariffs, some importers proactively stocked their inventories with products to mitigate the impending costs.
Distributors like Phillip Stice of Doraville-based Specialty Wines are leveraging this preemptive inventory, opting to invest more in European wines rather than those produced domestically in California or Oregon.
Conversely, some distributors have ceased ordering new products altogether, resorting to cost-saving measures such as laying off staff.
Mike Coghlan, owner of the Norcross-based distributor Avant Partir, revealed that he created a “cash cushion” after Trump entered office, allowing him to purchase inventory before tariffs came into play.
“Trump telegraphed what he wanted to do; we just didn’t know when, where, and how much,” Coghlan said.
This unprecedented uncertainty puts additional strain on an industry already grappling with declining sales.
According to data from industry group SipSource, American wine sales plummeted by 6% in 2024, attributed to various factors such as fewer Americans consuming alcohol, tightened budgets, and a plethora of alternative beverage options.
This recent round of tariffs is not the first challenge faced by the wine industry under Trump’s administration.
In 2019, the U.S. introduced a 25% tariff on non-sparkling wines imported from France, Germany, Spain, and the United Kingdom, leading to significant concern among wine businesses.
Demmond expressed fears that the tariffs would threaten the very existence of Rive Gauche, yet the company managed to survive.
This time around, the industry appears more united in assisting one another with the financial burdens imposed by the tariffs.
Demmond indicated that wineries and freight forwarders are offering discounts to help ease the pain, aimed at ensuring that businesses can remain operational amid the turmoil.
“The first round of tariffs took a little bit of time for people to come on board with that scenario,” Demmond remarked.
“This time, they already had a plan in place because we lived through it.
That’s at least been a silver lining.”
Despite industry efforts, Demmond noted the inadequacy of domestic supply to completely replace European wines.
As an agricultural product, producing new wines requires planting new vineyards, and it takes years for vines to mature enough to yield wine.
By the time domestic production could replace the volume currently imported from Europe, it is likely that distributors would face severe financial difficulties.
“I just live with a constant anxiety now,” Demmond added.
“We’re losing sleep.”
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