The drinks industry is bracing for significant economic repercussions if President Donald Trump’s proposed tariffs on imports from Canada, Mexico, and potentially China are implemented in the coming weeks. A recent economic study has revealed that the fallout could cost billions, with the impact particularly severe for certain imported products.
During a December webinar hosted by the Wine & Spirits Wholesalers Association (WSWA), industry experts discussed a study by John Dunham and Associates, which forecasted the potential losses under a blanket tariff of 10%-30% on imported wine and spirits. According to the study, a 10% tariff could result in an economic loss of $1.9 billion, while a 30% tariff would escalate that figure to $14.9 billion.
The study’s findings underscore the vulnerability of certain products, especially tequila imported from Mexico, which accounted for $4.55 billion in U.S. imports in 2023. Other goods such as Champagne from France and Scotch whisky from Scotland could also face significant price hikes if other countries become involved in the trade dispute.
In response to these looming tariffs, industry experts at the webinar recommended that companies diversify their portfolios, particularly by focusing on the growing, yet still niche, market for low- and no-alcohol beverages. However, as noted by Jessica Jacobsen of Beverage Industry, there are no simple solutions, and past experiences with tariffs may not offer a reliable guide in the current economic climate.
Beyond price hikes, the industry could face broader consequences. Ontario Premier Doug Ford has threatened to remove all U.S.-imported alcoholic beverages from Canadian shelves if the tariffs are enacted. “I’ve been on the phone every day with governors, making sure they understand how important the relationship is between Ontario and the U.S.,” Ford said on Monday. “We are the number one export destination for 17 states, and number two for 11. If these tariffs go through, we’ll clear every bit of U.S. alcohol from the shelves.”
In the U.S., the tariff impact extends beyond higher consumer prices. Imported alcohol must pass through a three-tier system involving importers, distributors, and retailers. According to the U.S. Wine Trade Alliance (USWTA), for every dollar spent on wine in Europe, $4.52 is generated for American businesses. Most of the revenue from imported alcohol stays within the U.S. economy, benefiting domestic importers and distributors.
However, tariffs could also raise production costs for domestic alcoholic beverage producers. As Bon Appétit writer Anna Lee C. Iljima notes, many U.S. wineries and distilleries rely on imported ingredients, meaning that higher tariffs would likely increase their production expenses.
This isn’t the first time the industry has faced the threat of tariffs, and past experiences suggest that short-term disruptions may eventually lead to a resolution that restores the status quo. Still, the uncertainty surrounding these potential tariffs could drive many to reconsider their drinking habits for the time being.
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