(Bloomberg) — When President Donald Trump posted his 200% tariff threat on European wine, growers were already struggling with a secular decline in consumption so dire that France started paying farmers to uproot vines.
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In Cave Héraclès, the country’s biggest organic wine cooperative, over 200 stainless steel tanks about as high as six-story buildings are still brimming with last year’s production, and the surrounding vines in the Occitanie region are already starting to bud again — as in the rest of Europe.
Meanwhile, following a rush to ship bottles to the US before any tariffs hit, European wineries say orders are drying up from their top customer abroad, meaning more of this year’s Merlot and Chardonnay could end up stuffed in cellars. Some of the wine might even need to be distilled into hand sanitizer.
“Our next harvest is approaching and our vats are still full,” said Jean Philippe Julien, president at the cooperative of 80,000 winemakers in the south of France and a fourth-generation grower with 45 hectares (110 acres) of vineyards in the area of Codognan. The vats need to start being emptied in July at the latest, he said, but “now that the buyers have enough wine, they’re telling us to wait.”
The punitive levy floated by Trump this month is bringing the ailing industry to a standstill even before anything has been decided. Producers are at a loss, without knowing how bad the tariffs will actually be, how much their expenses will increase and how big a discount they might need to offer. If there’s no space in their tanks for the new wine to ferment, they’ll need to incur steep costs to transport and store some of the older wine elsewhere.
American buyers, on the other hand, don’t want to take any risks with levies potentially due to be imposed as early as next Wednesday. The halting of shipments to the US is already costing wine businesses about €100 million ($107 million) a week, according to Ignacio Sánchez Recarte, secretary general of the European Committee of Wine Companies, known as CEEV.
“It’s already happening,” said Lamberto Frescobaldi, president of Italian association Unione Italiana Vini. “There are US importers that have said stop the boats and do not load the containers because if the wine or the spirits land in the United States after April 2nd, which is most of them if they’re leaving now, they’ll have to pay 200% taxes.”
The trade turmoil is coming against a backdrop of a global wine glut, despite a slump in production to a 60-year low in 2024, with demand falling even faster. Young consumers are drinking less alcoholic beverages, and when they do, many prefer other types, even in France. The country in October secured €120 million of European Union funding to compensate farmers for destroying vineyards.
“There was already a slowdown in the domestic market even before Trump came up with the idea of imposing tariffs,” said Frederic Saccoman, general director of Héraclès. Now, “we don’t even know how to calculate the price.”
Fearing a trade war was coming when Trump won the election, many producers across Europe rushed to ship as much as possible to the US. Sogrape, Portugal’s biggest wine exporter and owner of the Mateus Rosé brand, ensured its American importer had approximately six months of supply, the company said in an emailed response to questions.
Daragh Quinn, a former banking analyst who runs family-owned Bordeaux wine estate Château de Fieuzal, took similar measures. Last year, the winery sent more bottles to the US in anticipation of what could happen with tariffs, and they are now “in a wait-and-see moment as there are many open questions and few answers,” said Quinn.
If such a prohibitive tariff does come into effect, continuing to supply the US market will become virtually impossible, said Adrian Bridge, chief executive officer of Fladgate Partnership, a holding company that owns Port wine businesses in Portugal, including Taylor’s.
“This means a complete and immediate closure of the market,” the CEEV’s Sánchez Recarte said. “There is no alternative market that could compensate for such a loss.”
The US bought almost 30% of Europe’s wine exports last year. Producers may have to adopt mitigating measures, such as converting excess product into other alcohols or sanitizers, selling wine at a discount in supermarkets or deliberately limiting the capacity of vineyards for upcoming seasons by removing more plants, Sánchez Recarte said.
Trump warned that the 200% tariff on wine, champagne and other alcoholic beverages from the EU would go ahead if Brussels followed through with a levy on American whiskey, currently due on April 14. The EU is identifying concessions it’s willing to make to try to negotiate a partial removal of US tariffs, according to people familiar with the matter.
So, Jerome Bauer, president of France’s wine and spirits producers’ federation CNAOC, is hoping that maybe the worst could be avoided. He’s lobbying EU politicians to remove bourbon from a list of tariffs to spare the wine industry from retaliation.
“We are doing a lot of lobbying with our national and European politicians to remove the American bourbon from the list of reprisals in the context of the conflict,” said Bauer, 45, a fourth-generation winegrower in Herrlisheim, in the Alsace region, near the border with Germany. “No one has anything to gain from this conflict, so we would like to be able to resolve it in a diplomatic and intelligent manner.”
The European Commission proposed targeted measures on Friday to ensure wine sales from the bloc remain competitive, including financial help, marketing actions and even assistance to boost wine tourism that would diversify revenue. But it might take some time until any of it is approved, let alone implemented.
–With assistance from Henrique Almeida, Macarena Munoz Montijano and Celia Bergin.
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