Over the past month, the wine industry has been caught in a whirlwind of shifting signals from the new US administration regarding tariffs. The rapid pace of change has left many wondering whether these moves are strategic negotiation tactics or actual policy changes that will directly impact pricing for wine-related goods and materials.

The Trump administration initially imposed tariffs on imports from Mexico (25%), Canada (25%), and China (10%) – the White House Fact Sheet is here. While a temporary 30-day pause has been placed on tariffs for Canada and Mexico, concerns about retaliatory measures remain high. Canada, for example, had already announced 25% counter-tariffs on US goods, including alcoholic beverages – a move that could significantly impact California wineries and other US producers exporting to our northern neighbor.

But it's not just the challenges with finished goods that we are concerned about; it is how tariffs will affect the packaging components like boxes, bottles, capsules, and more. With our heavy dependence on glass from China and Mexico, the tariffs will cause a surge in demand for US glass, creating a shortage and upward price pressure. If producers cannot access US glass, they will be forced to buy inflated glass prices from countries with tariffs that increase the cost of goods from 10% to 35% across multiple packaging components.

There are also hints of potential tariffs on the EU. Some companies stockpile finished goods and raw materials to mitigate potential tariffs and avoid increased prices or shortages. Simone Luchetti, president of Banville Wine Merchants, has said: "A 20% tariff increase at the importer level doesn't just stop there – it compounds through the supply chain. By the time it reaches the consumer, that 20% can turn into a 35% or more increase, which is significant."

This compounds the wine industry's rising costs. Wine is already the most expensive cost-per-ounce product in the Alcoholic Beverage category, and cost-of-goods inflation will only exacerbate the margin compression for producers as they cannot pass along those costs to consumers.

American Association of Wine Economists

Most of the key drivers remain steady, but fuel prices increased from December’s $3.494 to $3.634 a gallon. There are concerns about increased fuel prices due to winter demand and Canadian energy tariffs (both direct and retaliatory).

Ocean freight from Asia to the US West and East coasts has decreased since last month, but there is still upward pressure on pricing coming out of the Chinese New Year, compounded by the anticipated increase in ocean freight activity from US producers stockpiling Chinese goods to avoid future tariffs.

packaging tariffs glass