How new U.S. tariffs on the EU and U.K. could affect the cost of booze

Your glass of French or Italian wine could get pricier as soon as next week, with a new 15% U.S. tariff on European Union imports set to kick in on Aug. 1. The same goes for popular brands of whisky, cognac and other spirits, many of which are made in Europe.

Harry Root, owner of Grassroots Wine, in Charleston, South Carolina, which distributes domestic and imported wines to restaurants and retailers, said the new levies on goods from the 27-country EU will leave him no choice but to raise prices for his clients, which he said are likely to pass on the added costs to consumers.

"We have to increase prices because when the container of wine I've ordered lands, I have to pay 100% of whatever the tariff is on that wine," Root said on Wednesday at a U.S. Wine Trade Alliance (USWTA) roundtable on the impact of the new U.S. tariffs on the EU.

Higher prices for imported wines will also raise the cost of wine produced in the U.S. as consumers shift to domestic labels and drive up demand, according to USWTA President Ben Aneff.

"Econ 101 will tell you that higher-cost imported products will also mean higher prices for domestic products," Aneff said at the roundtable. "So you'd expect a big drop in demand, higher prices, lower choice for consumers. It's a problem."

Max Rohn, CEO of Long Island, New York-based Wolffer Estate winery, put it bluntly.

"We want people to drink wine, and tariffs will make them drink less wine," he said during the USWTA event.

A trade group representing Italian winemakers, Unioni Vini Italiani, is warning that a bottle of Italian wine that previously retailed for $11.50 in the U.S. could cost around $15 after the 15% EU tariff kicks in.

The White House didn't respond to a request for comment about concerns that higher tariffs on EU and other imports could raise the cost of wine and spirits in the U.S.

A 10% American levy on the U.K. under a trade deal announced in May could also push up liquor costs for U.S. consumers. Drew McKenzie Smith, founder and managing director of Fife, Scotland-based Lindores Abbey Distillery, told CBS MoneyWatch that the tariff on shipments to the U.S. could force him to hike the price of a bottle of scotch by an equivalent amount.

"We had hoped to shoulder that cost because if you put your whisky up too much, then people won't buy it. But to cover that, it means we'd have to add 10% to the price of a bottle, so it's a tricky one," he said, noting that a bottle of Abbey Distillery scotch that currently retails for about $86 could rise to about $94.

In 2024, the U.K. exported 132 million bottles of scotch whisky to the U.S., according to the Scotch Whisky Association.

Alex Durante, a senior economist at the Tax Foundation, a nonpartisan research firm that is tracking the effects of tariffs on food and beverage costs in the U.S, said that the wine and spirits business is more exposed to tariffs because consumers are less likely to switch to domestic substitutes.

"It's a little different when you're assessing the impact on prices related to wine and spirits compared to other goods because consumers have certain tastes and preferences," he told CBS MoneyWatch.

Meanwhile, unlike with some industries, which may be able to relocate factories from abroad to the U.S., wine production can't be reshored.

"You can't produce French wine in the U.S. because then it ceases to be French wine," he said. "If consumers have a strong preference for a particular bottle, they'll continue to buy it."

Added Aneff of the USWTA, "Wines from one place are not fungible for wines from another. It's a different product."

Trade groups for both European and domestic wine producers are lobbying for exemptions from the 15% tariffs on most EU goods, citing the potential for substantial losses on both sides of the Atlantic Ocean. Unione Italiana Vini said in a statement on Monday that the 15% tariff would result in a $371 million hit for exporters.

"We are now calling on the Italian government and the EU to consider appropriate measures to safeguard a sector that has grown significantly thanks to U.S. buyers," the group's president, Lamberto Frescobaldi, said in a statement, while acknowledging that the finalized deal "at least resolved the uncertainty that was stalling the market."

The USWTA is also urging U.S. trade officials to include wine in its list of exempted goods under the new U.S.-EU trade deal.

"We are heartened that negotiations are leaving room for wine to be included under the zero-for-zero exemption structure," Aneff said in a statement. "Now is the time to ensure wine is prioritized in the final agreement."

Addressing the EU tariff agreement, Distilled Spirits Council President and CEO Chris Swonger said the group is also "optimistic that in the days ahead this positive meeting and agreement will lead to a return to zero-for-zero tariffs for U.S. and EU spirits products."

The stepped up U.S. tariffs on the EU wouldn't just hurt consumers — they could also lead to the loss of thousands of jobs at manufacturers and distributors, according to industry experts. Restaurants, which depend on sales of European wines to buoy them financially, also could feel the impact in the form of slimmer profits.

Typically, if a restaurant pays $15 for a bottle of wine from France or Italy, the two largest exporters to the U.S., it will charge patrons $15 a glass, Aneff told CBS MoneyWatch.

"Their margin is five times the cost of the bottle," he said. "And for a restaurant that's not a luxury — it's an absolute necessity."

Such profits ensure that restaurants can stay in business and preserve jobs.

EU imports "are vital for the 47,500 wine retailers, 6,000 importers and distributors, and hundreds of thousands of restaurants around the country," Aneff said. "In a nutshell, wine from the European Union brings an incredible economic surplus to businesses in the U.S. No other product allows us to capture such a huge percentage of the revenue generated here in the U.S."