US liquor importers are cancelling cargo from Europe and paying potentially catastrophic losses as President Trump threatens 200% higher tariffs that could take effect next month.
The US Wine Trade Union, which represents around 6,000 retailers and wholesalers, said President Trump's threat of slapping 200% tariffs on European alcohol had a calm effect, with some importers quickly canceling orders that were not ships or docks.
SC-based distributor Glasroot Wine ordered a $1 million European wine last week.
Its owner, Harry Root, says he has $250,000 worth of Italian and French wine shipments that are supposed to arrive in early April.
The 200% tariff will trigger a $500,000 tax bill for family-owned businesses, 23-year-olds, including stores and restaurants in South Carolina and Alabama.
“That's more money than we make profits each year,” Root told the Post. “If we had to come up with $500,000, it would start the wind for our company.”
The US Wine Trade Alliance is promoting a so-called “products on the water” exemption, which allows US companies to avoid tariffs if goods are being transported when taxes are enforced.
In the meantime, USWTA advised members in this week's memo to “stop shipping all wine, spirits and beer from the EU.”
“The flat reality is that there is no guarantee of exceptions,” according to a USWTA memo on Tuesday.
“We believe the US could immediately retaliate with tariffs on April 2nd,” according to a USWTA memo.
On Thursday, the EU pushed back the tariff deadline for US bourbon to mid-April after announcing the 50% whiskey tariff, which is due to be imposed on April 1, in response to Trump's new tariffs on all steel and aluminum imports that came into effect this month.
“This provides additional time for discussion with the US administration,” EU trade spokesman Olov Gill said in a statement. AFP Reportadded “constructive dialogue with the United States to seek solutions that avoid unnecessary harm to both economies.”
Last week, in response to the EU's 50% whiskey tariffs, President Trump revealed the threat of a 200% tariff on all alcoholic beverages from the EU.
“This is perfect for the US wine and champagne business,” Trump wrote about the truth social last week.
American importers and distributors see that differently.
US importers “have to decide whether to risk 50% to 200% tariffs,” the president of the US Wine Trade Union told the Post. “Everything between these two numbers can cause your business to go bankrupt.”
If the tariff war escalates, consumers will notice by May or June that some of their “favorite” wines are no longer available, Aneff said. Summer wines, including roses and Riesling, have not yet arrived, he added.
For restaurants, losses in European wine are reduced to already thin profit margins.
“Restaurants rely on the presence of imported wine,” Amph said.
According to the American Wine Economists Association, Europe accounts for 80% of all wines imported to the United States.
As reported by the Post, consumers are beginning to stockpile European wines in anticipation of tariffs.
The first round of liquor tariffs in 2019 slapped European alcohol with a 25% tax, with French wine imports falling by 54% and German imports falling by 42%.
