
Darin Szilagyi, Sommelier & APR
Executive Editor Wine X Magazine
Wine X Magazine Online Edition
I don’t write much anymore. The Clark Kent side of my life has all of my attention these days, and that’s been a good thing, to be honest. Plus, Wine X has an embarrassment of the riches of the elite, (in)famous wine educators who hide behind the Guy Fawkes Anonymous mask of “Wine X Staff.” They’re better than me and funnier. So I’ll crawl out of my Executive Editor role just this once, and then I’ll re-don by black-rimmed glasses as soon as I hit the post.
Somewhere in my alphabet soup of degrees is a BS in Economics from The University of Texas, focusing on sectors and markets. That intersects well with wine as a hobby-passion because, as most hibernating economists will tell you, where we most use our lines and graphs is over happy hour with a napkin & pen involved. Now, we have that rare occasion to geek out at least a little without shame. Buckle in while I pretend like I know what I’m talking about
If you haven’t heard or surmised, here’s what’s up: As the Trump administration rolls out its 2025 trade policies, tariffs are again at the center of economic discussions. The recently announced tariffs primarily target imports from Canada, Mexico, and China. However, in the context of the U.S. wine industry, these particular tariffs are unlikely to have a significant impact. Canadian and Mexican wines represent only a tiny fraction of the American wine market, making the effect of increased import costs relatively minor.
A far greater concern for both consumers and winemakers would be the potential imposition of tariffs on wines from Europe, particularly from France, Italy, Spain, Germany, and Portugal. These countries dominate the premium imported wine sector in the United States, and any trade restrictions could create ripples throughout the industry.
So, let’s explore why tariffs on Mexican and Canadian wines will have little effect, why European tariffs could reshape the American wine landscape, and how domestic alternatives may benefit in both the short and long term.
Why Tariffs on Mexican and Canadian Wines Won’t Matter Much
Canada and Mexico are growing wine producers, but they remain niche players in the U.S. market. According to industry reports, less than 2% of imported wines in the U.S. come from these countries. Most Canadian wine production stays within its borders due to a relatively small output and a strong & patriotic domestic market. Similarly, Mexico, while home to emerging wine regions like Valle de Guadalupe, remains a minor exporter to the U.S.
Even if a 25% tariff increases the price of these wines, the effect on the broader American wine market will be negligible. Consumers who buy Mexican or Canadian wines tend to do so as a novelty rather than a staple purchase, meaning they can easily switch to domestic options without much disruption…. or, more likely, just pay more for their novelty.
The genuine concern lies in the possibility of tariffs on European wine….meaning French, Italian, German, Spanish, and Portuguese wines from the EU, which are still widely viewed (especially for Atlantic Seaboard drinkers) as the most prestigious winemaking region.
The Real Threat: Tariffs on European Wines
European wines have long been a staple of the American fine wine and fine dining market. The United States imports billions of dollars in wine annually from France, Italy, Spain, Germany, and Portugal. These countries are home to some of the most famous wine regions in the world – like Bordeaux, Burgundy, Tuscany, Rioja, Mosel, and the Douro Valley, making their products irreplaceable for many enthusiasts.
Why European Wine Tariffs Would Hit Hard
If the Trump administration were to impose tariffs on EU wine imports similar to those seen during the trade disputes of 2019 – 2020, it would create significant market shifts:
1. Price Increases on Premium Wines: French Bordeaux, Italian Barolos, Spanish Riojas, and other sought-after European wines could see price hikes of 25% or more, making them unaffordable for many consumers. That’s a price increase stacked on top of a 15-year run-up on their price per bottle that the producers have enjoyed and the last three-year inflationary impact that has been clawed into the coffers of retailers and restauranteurs. I still have a few bottles of 1990’s Lafite that I purchased at around $200 a bottle. Try to buy that bottle today, pre-tariff, and you’re talking about four figures….. the post-tariff price at Knife? You might as well go buy an Omega watch. At a certain point, the bottle shock goes from silly to stupid. Having passed the wine list around at nice dinners lately, I’d submit we are already at stupid level. 125% of the stupid threshold is just unfathomable.
2. Reduced Selection: Importers might bring in fewer European wines due to the financial burden, leading to a diminished selection at wine shops and restaurants. Think about it. There is an economic equilibrium of importation required to overcome the shipping cost of a bulky and fragile product across a long, weather-challenged distance. Then, even when you get the product here, an inventory turn velocity slowdown amounts to a balance sheet and, subsequently, an income statement problem. Four hundred years of economic history shows that this dynamic slows the supply chain. It is justly so. And that scarcity and compounding impact on bottle price are separate from the tariff impact.
3. Industry Shake-Up: Many U.S. distributors and retailers rely heavily on European wine sales. A dramatic drop in demand could lead to financial struggles for importers, restaurants, and high-end wine retailers. As their marginal revenue decreases to their marginal daily expense, they will subconsciously or consciously NEED to promote higher-sale-velocity alternatives just to stay in business. For audiences beyond the top 5% of wine buyers, those few words of affirmation go a long way toward which bottles end up in the cart….virtual or tactile.
Unlike Canada and Mexico, which contribute minimally to U.S. wine imports, the European Union accounts for roughly 75% of all imported wines in the country. Tariffs on these wines wouldn’t just be an inconvenience, they would fundamentally alter the American wine market landscape.
The Rise of Domestic Alternatives
If EU tariffs come into play, American consumers will likely look for (or be steered to) domestic substitutes. While California already dominates the U.S. wine market, certain styles that mimic European wines could see a surge in demand.
Potential Winners in the U.S. Market
If tariffs drive up the cost of European wines, consumers and sommeliers will turn to American alternatives. Some potential beneficiaries include:
Paso Robles Rhone-Style Wines (vs. French GSM Rhone Varietals)
France’s Rhone Valley is famous for its Grenache, Syrah, and Mourvedre (GSM) blends. Paso Robles, California, produces excellent Rhone-style wines that could, and should, become more popular as a substitute for pricier French imports. Go buy a Tabals Creek GSM, and blind taste it against the best French GSMs, strap on a lie detector, and let me ask you a few questions 🙂 West Coast Rhone-Ranging-Drinkers made this move a long time ago, according to SVB and other trusted wine economists. Those West of the Continental Divide haven’t woken up yet, but they should, and a tariff will rightly accelerate a market certainty. A second shout out to Tablas here…. really, they’re bottling magic.
California Chardonnay (vs. Burgundy White Wines)
Burgundy’s Chardonnays from regions like Chablis and Meursault are some of the most sought-after in the world. California Chardonnays, particularly from Sonoma and the Santa Cruz Mountains, could regain traction as a more accessible alternative. I say regain because there’s no doubt that, starting with Robert Mondavi’s Estate Chardonnay in the 1980s, Americans once truly loved California Chardonnay. Some drinkers hung in there & stayed strong, but there’s been a silent revolt against the wild butter and wood over-commitment by West Coast winemakers. Their perception is that the most Malo-y-Oak-y Cahrdonany is simply tired and unsavory. I drink so much more subtle Chablis today than ever, and I’m not alone.
More to the point, this silent erosion has been going on so long that I know several thirty and forty-something winemakers were really in the market when the butter & wood revolt started…they just know they like Chablis more than Chardonnay because that’s all they’ve known. My opinion is that the finesse chards are going to see a resurgence.
Bubbles vs Champagne
If there is a most resilient bottle, it’s Champagne. It’s synonymous with life’s best moments and a celebratory add-on to the good life. And, celebrations, being what they are, tend toward Go Big or Go Home. I don’t see much market movement here.
However, I see a curtailing of America’s discovery of Fraciocorta, which is a shame. In my opinion, it’s the greatest unknown bottle among wine lovers. It’s enjoyed a brief moment in the spotlight thanks to the viral fashion ripples that started with a series on SommTV. I don’t think a 25% price increase will slow curiosity as much as I fear importers will cut it quicker than other higher-volume sellers.
If you haven’t had a Franciacorta or haven’t tried SommTV, do both on the same day. If you’re here reading this, you are in those target markets, and a little curiosity on your part will pay off…. trust me.
Napa Sauvignon Blanc Vs Loire & Bordeaux Whites
Hands down, the best value in wine is Napa Estate Sauv Blanc. You can get your hands on the very best Napa Estate bottles for less than the same price as a pedestrian or even bad estate red from any of the world’s preferred regions, tariff or sans-tariff. Will much change here? I dont see it, sadly/not-sadly…. The problem is that Sauv Blanc production in Napa is crowded out by the need to capitalize on the land expense vs. market-clearing-price-per-tonne differential between Cabernet and Blanc….. There’s not enough supply to matter, and even a reasonable increase in demand won’t be enough to rip red blending grape vines in favor of a white.
I’m good with this because I’d really like to reserve the right to continue to see the craftsmanship of the world’s elite winemakers on a regular basis – which means a sub $50 a bottle. SB is my happy place for that.
Washington State Cabernet Sauvignon & Merlot (vs. Bordeaux Reds)
Bordeaux wines, especially from the Left Bank, are known for their Cabernet Sauvignon dominance. Washington State’s Cabernet and Merlot wines – especially those from AVA-specific regions like Red Mountain and Walla Walla Valley- are some of the most underrated in the U.S. market. Paso cabs used to be in this category, but the massive market effort around Daou killed that for drinkers, even if it was a nice thing for Paso producers.
Washinton reds already offer outstanding value compared to California reds, and as price inflation trickles down through the red-scape, more consumers may and should discover Washington’s exceptional quality. The great thing for all of us is that Washington produces a LOT of very high-quality wine. They have more land to plant, and the terroir is fantastic and radically outpaces its fashionability.
Oregon Pinot Noir (vs. Burgundy Reds)
With Burgundy wines becoming prohibitively expensive under tariffs, Oregon’s Pinot Noirs, already known for its Burgundian character, should see a significant uptick in sales. Oregon’s pinots have the cache and story arc to be “interesting” to burgundy drinkers, who highly value the niche aire of scarcity and sense-of-place. And more so than other stateside pinots, the region is more uniformly Burgundian in its winemaking approach.
Will Sonana and Central Coast Pinots benefit too? Sure, a little. I think brands like Kosta Browne and Sea Smoke will see a resumption of their per-bottle price escalation after a few years of increased supply, blowing up their scarcity/exclusivity narrative. When I can find KB at Central Market 365 days a year, there’s no need to buy my wine list allocation anymore. There’s still a glut of exceptional-but-newly-capitalized California Pinot vis-a-vis buyers….. meaning that we’ll still see a chase for market share with those bottles for at least the next few years.
Texas and Virginia Wines (vs. Spanish and Portuguese Varietals, and Viognier and Cab Franc)
Texas and Virginia, emerging wine regions in the U.S., and their ongoing experimenting with what their vineyards can do yield enough results to make them feel confident about which grapes they can produce well vs. what they can produce for novelty. Neither produces enough to hit the shelves beyond their region, but to be clear, both AVAs sit near reasonably large MSAs…..these grapes could see increased interest, albeit capped by available capacity. The net impact, in either case, is unlikely to be a fundamental market shift opportunity, as is the case for Washington Reds, but instead will serve to finance ongoing experimentation and infrastructure payback. Down the road, as the post-production infrastructure gets built out and paid for in both states, we’ll see the economic hurdle of the production and realization of a bottle of Virginia and Texas wines to come down on a per-unit basis. That’s the win these regions are looking for, and frankly, that’s a good enough win.
Who Will Be The Big Winners?
Washington: The Hidden Gem of American Reds
While industry insiders have long respected Washington wines, they still fly under the radar compared to their California counterparts. However, Washington’s Cabernet Sauvignon and Merlot’s, particularly from regions like Red Mountain and Walla Walla Valleyâ, are often equal in quality to high-end Napa, Super Tuscan, and Bordeaux wines at a fraction of the price.
Paker, rightly so, announced the arrival of Washington reds with his (derived) 100-point rating of the 2018 Quilceda Columbia Valley Cabernet Sauvignon….. a bottle made by really cool people that I CAN STILL walk down to my local wine store down the street and grab for only $160….. if it were Left Bank, you add a zero and a requisite comma in there…. think about what I’m saying for a minute.
Like so much of the fickle fashion of product marketing, wine benefits dramatically and exponentially parabolically to scarcity & novelty-driven brand equity, be it singular – like Penfolds or regionally like Tuscany. Washington is a low P/E sleeping giant. Those market factors never sleep forever. Que Adam Smith, please….. The economic concept of substitution-in-use ultimately moves them, and afterward, consumption is accretively accelerated, underpinned by the viral propagation of their brand origin story. That’s the mathematical underpinnings of the creation of brand equity. Cheers to the Apple State, it turns out you’re a grape state too.
Spirits: Both Traditional and Emerging
Will It All Last?
While tariffs may initially drive consumers toward domestic wine alternatives, long-term demand is less certain. Markets have a way of correcting…. they may be sticky in the short term, but in the long run, elasticity always catches up. It’s simply a summation equation: rate and time function. High-end wine collectors and aficionados often prioritize European wines due to their historical prestige, terroir, and investable aging potential. If there is one thing that American wines outside of Napa haven’t proved, it is their ability to remain bright and youthful beyond a decade. Even with higher prices, many will continue buying Bordeaux, Barolo, and Rioja.
For the broader market, however, a prolonged period of high European wine prices could permanently shift consumer habits. If American wine regions successfully position themselves as alternatives, they could retain a portion of this newfound customer base even if tariffs are later removed.
If there is one U.S. wine region that stands to gain the most, it’s Washington State. Once wine drinkers taste Red Mountain Cabernet Sauvignon, it is hard to go back to overpriced alternatives. The quality-to-price ratio is too compelling, and many drinkers who try Washington Reds out of necessity may find themselves hooked for the long run.
Conclusion
The 2025 tariffs on Canadian and Mexican stuffs wines are unlikely to have much impact on the U.S. wine industry due to the small market share these countries hold. However, the possibility of tariffs on European wines presents a much more serious challenge. We might even see some preemptive strategies in pricing and inventories
While the short-term market shift could benefit American wineries, long-term demand for European wines remains strong. If tariffs are lifted in the future, many consumers will likely return to their favorite European vintages. Still, some portion of the American market may permanently shift towards domestic wines, especially those in Washington, which could finally get the recognition they deserve. Spirits, however, well, they get a little more wind in their sails. For now.