While much has been written about how the tariffs introduced in the White House’s April 2, 2025 Executive Order will reshape the U.S. wine industry, if and when they fully go into effect, very little has been written about how tariffs on wine actually work. We’ve prepared this simple guide to walk through how and when tariffs are assessed on wine imports, which we’ll endeavor to keep updated in real time over the coming weeks and months.
What Are Tariffs and Who Pays Them?
Tariffs are essentially a type of sales tax that is paid by the domestic importer based on the value of imported goods. Tariffs are collected by the U.S. Customs and Border Protection (CBP). Importers must pay tariffs up front when goods enter the country. Unlike, say, income taxes, which are assessed after revenue is earned, tariffs are paid by the importer before wine is released to a distributor or other third party. As a result, according to one importer, “even a 25% tariff, is a huge burden, because it turns your cashflow upside-down. Essentially, paying more than we would make in profit, before we could sell a single bottle, makes doing business a near impossibility.”[1]
The burden of paying tariffs can be allocated between the importer and the foreign supplier by contract (such as through use of the “DDP” Incoterm[2]), but the legal obligation is placed on the importer of record. Because wine importers are often operating on razor thin margins, even the threat that tariffs will be increased often forces scheduled shipments to be canceled. Importers’ losses are exacerbated because transactions with producers for allocations of specific vintages may take months, if not longer, to arrange.[3] Fine wine is not fungible. Moreover, delaying springtime shipments to hotter or colder months increases costs due to warehousing fees and temperature control requirements.[4] While there is an exemption in the Executive Order for goods in transit as of 12:01 am on April 5th (and arriving before May 27th)[5], this exemption was not communicated to the public until April 2nd and only applies to goods on “the final mode of transit.”[6] As a result, many wine shipments on trucks or trains enroute to port likely will not be eligible for this exemption (and shippers are required to submit their manifests to CBP twenty-four hours before loading containerized freight in overseas ports[7]).
While the US. Constitution explicitly tasks Congress with responsibility for imposing tariffs (U.S. Const. art. I, § 8, cl. 1), this authority has largely been delegated to the President through the Trade Expansion Act of 1962, (19 U.S.C. § 1862) and the Trade Act of 1974 (19 U.S.C. § 2411). The White House’s April 2 Executive Order also claimed authority under the International Emergency Economic Powers Act (50 U.S.C. § 1701 et seq.) and the National Emergencies Act (50 U.S.C. 1601 et seq.).
How Are Wine Tariffs Calculated?
Tariffs generally come in three forms: An “Ad Valorem” rate assessed in proportion to the value of the article being imported, a “Specific” rate (measured by volume), and a “Compound” rate (which includes both an “Ad Valorem” and “Specific” rate). Tariffs may be subject to “rate quotas,” which escalate if imports surpass a certain threshold.[8] Wine tariffs use a “Compound” rate, with the "Specific" rates set forth in Chapter 22 of the Harmonized Tariff Schedule, downloadable using this link (as of April 9, 2025).
President Trump’s April 2, 2025 Executive Order imposed an additional 10% ad valorem duty on imports from all major wine exporting countries. The Order also imposed higher ad valorem rates on imports from certain wine-producing regions, namely the European Union (20%) and South Africa (30%), although these higher rates were suspended for a period of 90 days on April 9th.[9]
For purposes of setting the ad valorem rate, the “value” of imported goods is the total price actually paid by the importer (including insurance and freight), plus things like packaging costs, the buyers’ sales commissions, “assists” (i.e. tools, dyes, molds, etc.), royalties and license fees payable to the foreign seller, and any resale proceeds that go back to the foreign seller. CBP’s appraisal generally includes an examination of the imported merchandise and the documents from the shipper, importer, or consignee (such as a certified invoice, bill of lading, or other declaration describing the goods and stating their value). CBP provides some guidance on the calculation of “value” in 19 C.F.R. § 152.103, which is available here.
Are There Workarounds to Paying Tariffs?
Not really. Although some commentators have joked about clever workarounds for the proposed tariffs, the exhaustive statutory definition of “value,” available here, leaves importers with very little room to maneuver.[10] And then there are the President’s own words on the subject:
“So we're going to have a minimum of cheating and we're going to be very severe on the people at the gate that watch the tariffs and watch the product coming in because there's been a lot of bad things happening at the gate because the money is so enormous that you're talking about. There's never been probably anything like it in terms of the enormity. And there are a lot of bad things happen that the people that do the check in and they're looking at 10 year jail sentences, if they do play… We're going to treat them so good, but if they cheat, the repercussions are going to be extremely strong.”[11]
There may be circumstances where importers wish to import wine in bulk and then white-label and rebottle the wine domestically. Unfortunately, importing wine in bulk and bottling it in the United States comes with its own challenges. By way of example, under French Appellation d'Origine Contrôlée rules, wine can only be called “Bordeaux” if it is bottled in Bordeaux.[12] Certain wines require original certificates of origin as a condition of entry, and importers of natural wine must possess certification regarding proper cellar treatment. Certification requirements for wine imports are described in greater detail here.[13]
Tariffs Aren’t the Only Fees That Importers Pay
If your head isn’t spinning by now, there’s more! In addition to the tariffs described above, importers are also required to pay a “Merchandise Processing Fee” and a “Harbor Maintenance Fee” (for wine transported by sea). Importers must also pay the entire federal excise tax up front, although importers may be eligible for a partial refund on this tax pursuant to the Craft Beverage Modernization Act (CBMA), which is summarized by the Alcohol and Tobacco Tax and Trade Bureau (TTB) here, and in TTB’s step-by-step guide. CBMA credits are $1 per gallon on the first 30,000 gallons of wine imported, 90 cents on the next 100,000 wine gallons imported, and 53.5 cents on the next 620,000 wine gallons imported. Note that bulk wine imports may be transferred in-bond from CBP custody to a bonded winery without having to pay the excise tax.[14]
On top of this, the importer must obtain an importer’s basic permit from the TTB[15] in order to take possession of any imported alcoholic beverages, and is responsible for ensuring imported wines have legally compliant labeling.[16] Certificates of label approval must be filed with CBP before the goods can be released for sale in the United States.
I’m experiencing Déjà vu! Didn’t President Trump Already Raise Tariffs on Wine Imports from the European Union?
Yes. During the first Trump administration, tariffs were imposed on some (but not all) wines imported from the European Union. In fact, wine has been “often held hostage and used as a political pawn between the two Western powers” [17] even though, as one importer put it, “tariffs are in practice being solely levied against American companies and consumers, and not against any of the parties responsible for the transgressions that have created the impetus for these actions.”[18]
Like many things with President Trump, the origin of wine-related tariffs can be traced back to a tweet. During his first term in office, President Trump’s state visit to France was largely overshadowed by negative press over a canceled war memorial visit during inclement weather followed by a social media “tirade” aimed at President Emmanuel Macron. Buried within the President’s many tweets on November 13, 2018, he wrote:
On Trade, France makes excellent wine, but so does the U.S. The problem is that France makes it very hard for the U.S. to sell its wines into France, and charges big Tariffs, whereas the U.S. makes it easy for French wines, and charges very small Tariffs. Not fair, must change!
The White House followed through with this change on October 18, 2019,[19] imposing a 25% tariff on certain wines in connection with the long-running U.S.-France trade dispute between Boeing and Airbus (if you’re wondering what Burgundy has to do with aircraft manufacturing subsidies, you are not alone). These tariffs were rolled back shortly into the Biden administration.[20]
Although we can take lessons from how the market adapted in 2019-2020 to predict how the market will weather the newest round of tariffs,[21] as “crucial industry metrics continue to decline,”[22] today’s landscape is fundamentally different than it was five years ago. According to one importer quoted in Forbes, “[p]roducers, importers, and distributors worked hard the last time tariffs were implemented, reducing their own margins, to lessen the impact to consumers…given the state of the industry today and the potential higher level of tariffs now, we can't expect that to happen. If 20% is the tariff imposed, then 20% is what consumers could expect to see on imported wines."[23]
Additionally, the 2019 tariffs were very specific, which led to some odd outcomes. For instance, the tariffs only applied to bottled wine under 14% alcohol, resulting in producers sending their highest ABV products to the United States. As one importer put it at the time, an “unintended consequence will be the rise of the 14.1%+ ‘Cuvee Américain; – Our friends…just selected all of their higher alcohol tanks for our upcoming Rosé and Rouge 750ml Cotes du Rhone bottlings, which keeps us tariff exempt at 14.1% and 14.2% ABV respectively!…Rouge and Rosé in 3L Bag in Box format? Those versions will come from the lower ABV tanks! Silliness.”[24] Ultimately, the 25% 2019 tariffs resulted in French wine imports falling by a staggering 54%.[25]
