Trump is going to ruin France's wine economy

Bordeaux wine merchants are facing growing anxiety over the uncertainty of U.S. tariffs, as the United States remains their largest export market. According to Philippe Tapie, president of Bordeaux Négoce, exports to the U.S. account for more than 400 million euros in revenue, representing 20% of total Bordeaux wine exports. China and the United Kingdom follow with 300 million and 200 million euros respectively. 20% of all French wine is sold in the United States.

The situation has become increasingly difficult to manage due to unpredictable changes in U.S. trade policy. Tapie explained that the American administration can change its stance overnight, leaving exporters with no clear outlook. This lack of visibility is causing concern among Bordeaux’s wine merchants, who are struggling to plan shipments and sales.

On Sunday, former President Donald Trump stated that the European Union would not benefit from tariffs lower than 15% on exports to the U.S., during a meeting in Scotland with European Commission President Ursula von der Leyen. The meeting was part of ongoing efforts to reach a customs agreement between the two sides.

Earlier this year, Trump threatened to impose tariffs as high as 200% on European alcohol in response to proposed EU taxes on American bourbon. In early April, he raised the possibility of a 20% tariff on all European products, though this was later suspended. Currently, tariffs stand at 10%, but at the end of May, Trump again threatened a 50% rate before announcing a planned increase to 30% starting August 1, pending the outcome of negotiations with the EU.

Tapie said that while merchants could find solutions if tariffs remain at 10% or even 15%, a jump to 30% would be devastating for Bordeaux’s wine trade with the U.S. He described the current situation as being forced into a standstill by an unpredictable American administration, while unsold stocks continue to pile up in warehouses.

Exporting wine from Bordeaux involves significant logistical challenges. Shipping by sea takes at least 30 days, and up to 60 days for deliveries to California. Tapie noted that it is impossible for merchants to adapt quickly to sudden changes in tariffs because of these long lead times. He said he has never faced such uncertainty in his thirty years in the business.

Twins Bordeaux, one of the region’s leading wine trading houses, has also been hit hard by the shifting landscape. Co-director and co-owner Sébastien Mosès said that about one-third of their revenue comes from the U.S., totaling around 30 million euros annually. The company typically ships more than one million bottles per year across the Atlantic.

Since January, Twins Bordeaux has seen its revenue drop by about half compared to last year. Mosès explained that merchants play a central role in selling Bordeaux wines abroad and are responsible for most export sales. He said that after Trump’s election in November 2024, they anticipated possible tariff hikes and shipped as much stock as possible to the U.S. at the end of last year. However, he added that this climate of uncertainty makes it impossible to develop a stable business strategy.

To cope with the risk, Twins Bordeaux has even resorted to shipping some cases by air—about 10,000 bottles in March—but only for high-end wines priced at no less than 150 or 200 euros per bottle. Air freight costs are at least two and a half times higher than shipping by sea.

Other merchants have taken different approaches well before Trump’s return to office. For example, Bordeaux trading house Bouey diversified its markets so that the U.S. now accounts for less than 10% of its exports. CEO Jacques Bouey said earlier this year that commercial strategies can no longer rely on just one or two countries due to global instability.

The new tariffs come at a time when Bordeaux’s wine industry is already under pressure from falling consumption and general export difficulties, which have led to overproduction and a collapse in bulk wine prices. At the start of 2023, one-third of Bordeaux’s roughly 5,000 winemakers reported financial difficulties.

Tapie expressed frustration at what he described as an accumulation of problems for Bordeaux’s wine sector, which is France’s largest AOC vineyard area. The ongoing uncertainty over U.S. tariffs adds another layer of challenge for an industry already struggling with multiple crises.