LOS ANGELES — There is a debate raging in the wine industry right now — could tariffs on imported wines from Europe drive more business to the domestic wine industry?
What You Need To Know
As of Aug. 1, the Trump administration agreed to a 15% tariff on all imports, including wine
Wine experts said tariffs on imported wines will damage the domestic industry
California is the largest producer of domestic wines, producing up to $73 billion annually
Jim Knight, owner of The Wine House in west Los Angeles, said no because wines from different countries are not apples to apples. A Bordeaux from France is not a Pinot Noir from Napa Valley.
“People will not say well I want a prosecco now, I want cava, I want domestic sparkling wine, no they want champagne,” said Knight.
As of Aug. 1, the Trump administration agreed to a 15% tariff on all imports, including wine, as part of the larger trade deal with the EU, saying he believes everyone will make money from the tariffs. But Knight said, the effects of that tariff will hurt American business.
“The importers of these French, Italian, Spanish, E.U. wines, those are American businesses,” explained Knight. “So if tariffs keep going up, and the uncertainty is still there, these U.S. wine businesses are going to be out of business.”
Wine consultant Chiara Shannon explained that the wine industry has a complicated three-tiered supply chain that includes winemakers, importers, and distributors, and any increase along that chain will be felt across the board.
“When importers are forced to deal with increased costs when the wines they’re bringing in are subject to new tariffs, they raise prices for the distributors,” Shannon said. “When distributors raise prices on imported wines, in their portfolio they have domestic wines and imported wines they work within a complex matrix of pricing. And so rather than double the price of their best-selling champagne, for example, they will raise prices across the board, including many domestic wines.”
California is the largest producer of domestic wines, producing up to $73 billion annually.
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