Impacts of a U.S.-led tariff war on international trade in wine, beer, and spirits

The announcements by President Trump in April 2025, of unilateral hikes of 10–50 percentage points on U.S. import tariffs on all countries’ goods, are under threat of coming into force on July 9, 2025. This article estimates their likely effects on trade in alcoholic beverages, using a global model of national beverage markets. Various scenarios are compared. They suggest that if the tariff hike was restricted to just 20% on goods from the European Union, the value of global trade in each of the three beverages would shrink by one-tenth. But the U.S. tariff hikes are to apply to all countries’ goods, which are estimated to shrink global exports by 13% for wine, 22% for spirits and 33% for beer. In that broader scenario, most countries’ wine exports would shrink, but exports of beer and spirits would expand for some countries thanks to the trade divergence generated by the varying tariff hikes. If the increasing uncertainty associated with these developments led to a cumulated 2% drop in consumer spending, virtually all wine-exporting countries would sell less wine to both the U.S. and the rest of the world. That is, wine trade destruction would outweigh trade diversion.