Trump’s reciprocal tariffs are the latest headwind to spill into the wine and spirits industry.
European Union imports now face a 20% reciprocal tariff, set to go into effect on April 9, which could have major implications for producers, restaurants, retailers, importers, and distributors.
And it may only be the beginning. In early March, President Trump posted on Truth Social that if the EU didn’t remove a 50% tariff on whiskey, the US would place a 200% tariff on wine, champagne, and other alcoholic products. EU’s whiskey tariff, which is now set for mid-April, is part of retaliation for the US putting a 25% tariff on steel and aluminum.
The White House has not offered any updates on whether the 200% tariff will go through on EU spirits or wine.
“The combination of uncertainty and threat of further price hikes to offset tariffs on both finished products and raw materials does not paint an overly optimistic picture for the alcohol beverage industry as it tries to return to growth,” Dave Williams of Bump Williams Consulting told Yahoo Finance.
Read more: What Trump’s tariffs mean for the economy and your wallet
The industry already had a “fairly underwhelming and somewhat concerning start to the year … after a promising finish to 2024,” he said.
If it goes into effect, the tariff could “essentially eliminate” imports of these types of products in the United States, Needham & Company analyst Gerald Pascarelli told Yahoo Finance.
“A company is not going to ship it on a 200% tariff,” Pascarelli said. The duty also “increases the likelihood that you’re going to get a global trade war with collateral damage, and that’s not going to be good for the sector,” he added.
In 2018, the EU imposed a 25% tariff on American whiskey as part of retaliatory tariffs in response to steel and aluminum tariffs during the first Trump administration. Given this sense of déjà vu, Pascarelli said the valuation of Jack Daniels maker Brown-Forman (BF-B) may already be pricing in the risk of tariffs. Its shares are down 14% year to date.
In early March, Brown-Forman CEO Lawson Whiting said the company has “been planning for this for much of fiscal year 2025,” as it has been through the experience before. The impact of tariffs was baked into its latest guidance.
Brown-Forman projects that organic net sales will grow between 2% to 4% for the year.
In a note to clients, JPMorgan predicts that “mitigation through pricing will be very limited” as spirit makers combat the slowdown in demand and pressure on consumer spending.
