Winemakers finding Trump’s tariffs hard to swallow

Burgundy stands out as one of France’s most esteemed wine regions, with the US being its largest export market. However, the tariffs imposed by Donald Trump threaten to drive up prices for European wine in the American market.

Shivering in the chilly mud beneath a light Spring rain, vineyard worker Élodie Bonet carefully removes unwanted vine shoots using her hands and pruning scissors.

“We aim for the vine to direct all its energy towards the shoots that will bear the flowers and subsequently the grapes,” she clarifies.

As I leave Élodie tending to the vines, I head towards the winery in the Burgundy village of Morey-Saint-Denis, where I meet Cécile Tremblay, the owner and winemaker.

She invites me into her cellar to sample some of her esteemed red wines, surrounded by oak barrels and vintage bottles labeled with age-old inscriptions.

The names inscribed are enough to entice any wine enthusiast: Nuits-Saint-Georges, Echezeaux, Vosne-Romanée, Clos-Vougeot, and Chapelle-Chambertin.

Ms. Tremblay exports more than half of her wine internationally, branded as Domaine Cecile Tremblay.

“In the United States, it makes up about 10% of our production; it’s significant for us!” she remarks.

After initially considering a 200% markup on alcohol imports from Europe, Donald Trump enacted a 20% tariff on nearly all EU goods on April 5th.

Just four days later, this was reduced to 10%, coupled with a warning that he might increase it back to 20% in July depending on trade talks. Trump is also indicating a potential future tariff of 50% on all EU imports.

When I inquire whether she is concerned, Ms. Tremblay responds affirmatively, “Yes, definitely,” before adding, “As is everyone else.”

However, she is hesitant to elaborate further. French winemakers currently tread carefully, wary of remarks that could worsen the predicament.

I wonder if his representatives might be more open? I drive to one of her neighbors, François Labet, the president of the Burgundy Wine Board, which encompasses this region’s 3,500 winemakers.

“The US is unquestionably the largest export market for our region,” he informs me. “They lead in both volume and total value.”

Before Donald Trump’s re-election, the US market was flourishing. While global exports of French wines and spirits experienced a 4% decrease last year, Burgundy wine sales to the US saw a marked increase.

In terms of volume, they rose by 16% in 2024 to 20.9 million bottles. This translated to €370 million ($415 million; £312 million) in revenue, a 26.2% hike compared to 2023.

Mr. Labet states that the US accounted for approximately a quarter of Burgundy’s wine exports last year.

Burgundy’s international reputation primarily stems from its red wines, which feature the renowned pinot noir grape. Notably, in the English-speaking world, ‘burgundy’ often refers more to the color than the wine itself.

Conversely, the French term for the equivalent color is bordeaux; an indication that they possess deeper wine knowledge, since while Bordeaux mostly produces red wines, two-thirds of Burgundy’s production is actually white.

These whites predominantly utilize the chardonnay grape. One of the most well-known examples, Chablis, enjoys immense popularity in the US.

Additionally, Burgundy is achieving success with its sparkling wine, Crémant de Bourgogne, alongside a minor yield of rosé.

This is advantageous for Burgundy, as while red wine consumption seems to be on the decline, white wine remains stable, and sparkling wine sales are on the rise.

Furthermore, according to Mr. Labet, the reds from Burgundy are increasingly preferred by consumers because they are generally lighter compared to those from the New World.

Interestingly, there is a detectable decline in demand for what we refer to as ‘big reds’ produced in the US; these wines tend to be high in alcohol and aged in new wood.

The cooler climate of Burgundy, even amid climate change, results in grapes with lower sugar and consequently lower alcohol levels.

Mr. Labet recalls the 18-month period during his initial presidency when Donald Trump slapped a 25% import tax on European wine amidst an airline dispute.

“We became casualties of that situation, which severely impacted our sales to the US, leading to roughly a 50% decrease in our exports there.”

Regarding the current 10% Trump tariff, he anticipates that French wine producers and US retailers will share the burden of the extra import tax to sustain sales.

However, if Trump follows through with the threatened tariff hike to 20% in July, the scenario could revert to 2019, where the market faced near paralysis,” Mr. Labet warns.

French wines as a whole may suffer even more.

“During President Trump’s previous term, elevating import duties by 25% led to swift losses of around $600 million (£450 million),” states Jerome Bauer, the head of the French National Wines and Spirits Confederation.

“At that time, Champagne and wines with an alcohol content above 14 degrees were exempted. This emphasizes the scale of the current threat.”

Mr. Bauer supports free trade, which means no tariffs. Such a stance is typical, given that France and Europe maintain a significant trade surplus with the US in terms of wines and spirits.

Surprisingly, even American competitors from California and Oregon, who you might anticipate would be celebrating, share this sentiment.

“From our standpoint, this is terrible. We are not pleased at all,” says Rex Stoltz, vice-president of industry relations at Napa Valley Vintners, representing 540 wineries in California’s renowned wine region.

“Wine is a global product. Even in Napa Valley, many of our corks come from Portugal, while oak barrels, vital for winemaking, are sourced from France.

Mr. Stoltz continues, “These materials are already costly and are likely to become even more expensive.”

Moreover, trade disputes impact both sides. He indicates that tariffs against Canada have severely affected US wine exports.

“Canada is California’s top export market and is among the premier markets for Napa Valley wines. Presently, there are no Napa Valley wines available in Canadian retail outlets.

“They’ve completely removed all American alcohol beverages from their shelves!”

In conclusion, Mr. Stoltz states, “We merely wish to compete on an equitable ground alongside our friends and neighbors across the globe. That’s our expectation and aspiration.”