Trump’s tariffs set to drive up bar bills, wipe out spirits jobs

LONDON/MILAN/PARIS >> U.S. drinkers will pay more for cocktails, champagne and foreign beers, brands will disappear from bar menus and jobs will be lost on both sides of the Atlantic as a result of U.S. President Donald Trump’s reciprocal tariffs, drinks industry bodies and analysts said today.

Trump’s latest round of global and country-specific tariffs was set to hit everything from the popular Negroni cocktail, based on Italy’s Campari liqueur, to Guinness stout, made by the world’s top spirits producer Diageo. He also introduced a 25% levy on all beer imports and added beer cans to existing aluminium tariffs, hitting labels such as Mexican-made Corona and Dutch Heineken. Edward Mundy, analyst at Jefferies, noted the worst threats of a 200% tariff on European alcohol and 25% tariffs affecting Mexican tequila and Canadian whisky had not materialised for now.

Spirits and beer stocks were trading largely flat today, while producers such as Diageo and Campari saw shares rise as tequila-related tariffs were avoided.

But industry bodies said the levies laid out on Wednesday were already high enough to hurt sectors that rely heavily on U.S. drinkers for sales. European spirits exports alone to the U.S. stood at 2.9 billion euros ($3.18 billion) in 2024, according to trade body spiritsEurope, which said many U.S.-based jobs also relied on this trade. French groups and officials warned of a 20% slide in sales and mass layoffs in regions like Cognac, where French brandy is produced for export, largely to the U.S. and China. The Spanish Wine Association warned no market could offset lost sales in the United States.

PRICE RISES COMING

“Many labels, which cannot be replaced by local production, will disappear from the tables of U.S. consumers, while a serious production and employment crisis is looming in Italy and Europe,” Micaela Pallini, president of Italian trade association Federvini, said in a statement. Japanese drinks maker Suntory said it will focus on selling spirits in countries where they are made as a result of tariffs.

Other major spirits and beer producers either declined to comment or did not immediately respond to requests for comment.

Analysts at UBS estimated that large listed spirits makers would have to hike prices by between 2% and 5% to cover the tariffs, or absorb the cost themselves and take a similar hit to operating profit.

In Spain and France, wine producers told Reuters they would work with U.S. importers to try and limit price increases, but U.S. wine drinkers would ultimately pay some of the cost.

Tariffs on imported wine would hurt U.S. businesses more than foreign counterparts, the U.S. Wine Trade Alliance added.

NOWHERE TO GO

Strategies used to mitigate tariffs during Trump’s first term, such as shipping wine in bulk, would not help with these blanket levies, Allan Sichel, chairman of Bordeaux wine lobby CIVB, said.

Producers of other alcohol such as Heineken or Campari could shift manufacturing or bottling of some labels to the U.S. to mitigate the impact, said Trevor Stirling, analyst at Bernstein. But other products like French champagne or Scotch whisky have to be made in specific countries or designated regions and cannot move production.

The Irish whiskey sector exports 40% of its production to the U.S., which drives growth and helps fund expansion in other markets, said Eoin O Cathain, head of the Irish Whiskey Association.

Companies may now shift their focus elsewhere, he continued, especially given ongoing uncertainty.

Trump’s threats of a 200% tariff may be revived if Europe’s retaliation hits U.S. spirits, such as bourbon whiskey.

The spirits industry, which has benefited for decades from zero-for-zero tariffs, should be disentangled from the growing trade war, Chris Swonger, president and CEO of the Distilled Spirits Council of the United States, said.

Reporting by Emma Rumney in London, Elisa Anzolin in Milan, Sybille de La Hamaide, Dominique Patton and Tassilo Hummel in Paris and Corina Pons and Emma Pinedo in Madrid; Additional reporting by Diana Mandia Alvarez in Gdansk.