Wine lovers will pay more to sip. Tariffs won’t give any room to breath.

Duties levied on countries across the globe will increase the cost of wines made in France, Italy, and everywhere else outside the U.S. to consumers, while harming the approximate 400,000 U.S. small businesses that rely on foreign wine imports, according to the U.S. Wine Trade Alliance.

Foreign producers are likely to suffer from lower U.S. sales in what is considered the biggest worldwide market for wine consumption, but the alliance expects American businesses will face greater harm.

That has a lot to do with the way the wine industry is regulated in the U.S. Under what’s known as the three-tier system, U.S. importers will pay the tariff when wine arrives in the country; that extra fee will get passed on to distributors, retailers, and restaurants. Ultimately, a consumer will pay more for their glass of French Sancerre with dinner.

These new duties on foreign wine imports will vary depending on where the wine is produced. Those made in European Union countries—including the popular wine regions of France, Italy, and Spain—will be subject to 20% tariffs. Wines made in South Africa will face 30% tariffs, while wines coming from Australia, New Zealand, Argentina, and Chile are being charged the more modest 10% baseline tariff.

The EU accounts for 72.3% of total imports of bottled wines into the U.S., according to Rafael del Ray, an independent consultant on wine markets who is based in Madrid.

“The net effect is prices will go up,” said David Parker, CEO and owner of Benchmark Wine Group in Napa, Calif., which deals in high-end and rare wines.

Wine that is already in transit, or that will be by April 4, won’t be subject to tariffs, and wine that is on the way by April 8 will be taxed at the 10% base rate versus the country-specific levels. Though threats of a 200% tax on European wine and spirits remains a possibility, Parker, who is also president of the National Association of Wine Retailers, would be “quite surprised” if that happened.

“That would be a death knell to European wine in the U.S.,” he said. “I don’t think the government wants to kill 400,000 small American businesses.

Ben Aneff, president of the wine trade alliance, agreed with Parker, although he said the fate of the 200% tariffs remains “unclear.”

The big beneficiary of Trump’s tariff scheme is supposed to be U.S. manufacturers. But in the case of U.S. winemakers, the benefits are mixed. “It’s a misconception that [tariffs] are a positive for U.S. wine producers,” Gabriella Macari, director of operations at Macari Vineyards in Mattituck, N.Y., told Barron’s.

Macari, as most U.S. wine producers, rely on distributors to place their wines with wine shops and restaurants. Most of these distributors have relied on selling European wines, which typically realize higher profit margins because they have been less costly to buy than American wines, Macari said. As a result, few of these wholesalers limit their business to U.S.-produced products.

“My main concern is my distributors—will my distributors survive,” she said.

U.S. producers that export their wines abroad could also be harmed by retaliatory tariffs. The U.S. exports less than 5% of its total production, however, according to Rob McMillan, executive vice president of Silicon Valley Bank’s wine division.

According to the U.S. Department of Agriculture, the value of U.S. wine exports was $1.24 billion in 2024, less than the three-year average of $1.31 billion. Most of that wine—nearly $435 million—was sold to Canada last year, while nearly $168 million in wine was sold to EU countries, and nearly $164 million was sold to the U.K.

Canada, which has been slapped with 25% tariffs on goods that aren’t part of an existing trade agreement, went beyond reciprocal tariffs to say they aren’t going to sell any U.S. beverages, McMillan said.

“We’re not a big export country—we consume the wine we produce,” he said about the U.S.

That means tariffs could potentially benefit U.S. producers, who make wine in every U.S. state.

Wine consumption has gone down across the world as younger consumers either abstain from alcoholic beverages or consume alternatives to wine, a trend McMillan has detailed for the past few years in an annual report on the state of the wine industry. About two-thirds of all wine consumed in the U.S. is produced domestically.

The fact “we have wine that is going to be more expensive coming from foreign countries does present an opportunity—in theory—for our domestic producers to sell more to our own consumers,” he said, although he noted that’s if “you ignore what tariffs do to the economy.”

What’s important for the consumer to understand, is that tariffs won’t lower prices for American goods. “It just increases the price of foreign goods.”