For the Drinks Industry, Tariffs Will Be Worse Than Expected

Preliminary numbers are pretty rough

Crates of beer. Threatened tariffs could make it difficult for both domestic and foreigner alcohol producers.
The cost of tariffs for the booze industry? Think billions.
iStock / Getty Images Plus

If President Donald Trump’s promised tariffs on imports from Canada and Mexico (and possibly China) are enacted within the next few weeks, the fallout could be worth billions. And not in a good way, according to a recent study.

In a December webinar by the Wine & Spirits Wholesalers Association (WSWA), the organization cited an economic study by John Dunham and Associates regarding blanket tariffs ranging from 10%-30% on all imported wine and spirits (as originally reported by the trade publication Beverage Industry). The numbers aren’t great.

At 10%, the economic output loss was estimated at $1.9 billion. At 30%, it was $14.9 billion.

Given that the countries in question offer some very specific and popular drinks — primarily tequila from Mexico, where we imported $4.55 billion worth in 2023, but also Champagne (France) and Scotch (Scotland) if other countries become embroiled in the trade war — you can expect those origin-designated goods to feel the greatest impact.

Experts at the webinar suggested companies conduct a “diversification of portfolios” and put more emphasis on low- and no-alcohol products, a growing but admittedly still small market. But there aren’t any great solutions. “Experts noted in the webinar that the industry has navigated through tariffs in the past, but because the economic landscape is different, the playbook will not have an identical outcome,” as Jessica Jacobsen of Beverage Industry notes.

Tariffs on Booze Aren't Going Away. Here's What That Means for You.
Expect higher wine and whisky prices, more closed restaurants and significant job losses

And it’s not like the industry will only be dealing with higher prices. Ontario’s Premier Doug Ford wants the Liquor Board of Canada to clear all alcoholic drinks from the U.S. off retailers’ shelves if the tariff threat becomes reality. “I’ve been on the phone every day with a few more governors making sure they understand how important the relationship is between Ontario and the U.S., not to mention Canada and the U.S,.” Ford said on Monday. “We are the number one export destination for 17 states and number two to 11. I said you’ve got to talk to your President because the first thing we’re doing is getting your bourbon. If these tariffs come in we will clear off every bit of U.S. alcohol from the shelves.” (In Canadian politics, Ford is their Trump. Take that how you want. He’s also not the Prime Minister, although Justin Trudeau has promised a “robust, rapid and measured response” to tariffs as well.)

Also, it’s not like $1 raised here or in another country equals a dollar gained or lost. Per a tariffs explainer at Bon Appétit, the US Wine Trade Alliance (USWTA) estimates that for every dollar that’s spent in Europe on wine, $4.52 is generated here for American businesses. In the U.S., imported wine/spirits have to go through a three-tier system; the beverages are sold to an American importer, then sold to a distributor and finally to retailers and restaurants. So the majority of revenue generated from imported alcoholic beverages actually stays here with American businesses.

The real kicker? As Bon Appétit writer Anna Lee C. Iljima notes, domestic producers of alcoholic beverages rely heavily on imported goods to make their products…which means universal tariffs most likely increase production costs for domestic wineries and distilleries.

We’ve gone down this road before, and the numbers were equally grim. Knowing how this administration works, we can expect some short-term pain and then a “solution” that probably brings the industry back to its current status quo. It’s enough to drive a person to not drink for a while.

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