As the April 2 deadline looms for the United States to implement a new wave of tariffs under its Fair and Reciprocal Trade Plan, there are concerns the Australian drinks industry could end up in the crosshairs of a trade war.
Australia faces a potential tariff of up to 8% on exports to the United States. Australian Trade Minister Don Farrell spoke with US Secretary of Commerce Howard Lutnick last week about the threat of additional tariffs and has vowed to fight to protect Australian wine and beef exports in the event of a trade war.
Professor Felicity Dunne noted at The Conversation that while there are no barriers imposed on the import of US wine into Australia “there has been some concern tariffs could be introduced regardless”.
“Wine is often the target of trade wars and President Donald Trump has threatened the European Union with a 200% tariff on all wine and spirits entering the US,” Professor Dunne said.
“As Australian wine makers have only recently recovered from Chinese and Canadian tariffs, any US tariffs would deal a harsh blow to the industry.”
According to the latest Wine Australia Export Report, the export market for Australian wines to the US was valued at $325 million in the 12 months ending December 2024.
Australian spirits industry calls for diversification
The Australian spirits industry is urging the Australian Government to move quickly to diversify Australia’s beverage exports as the threat of economically damaging US trade war looms.
The Trump administration has signalled Australian wine could be in the crosshairs of its America-first trade policy, putting at risk a $325 million export market.
Spirits and Cocktails Australia chief executive Greg Holland said the continued trade volatility highlights the inherent economic risk of Australia’s failure to capitalise on spirits exports.
“Australia really is ‘putting all its eggs in one basket’ when it comes to beverage exports,” he said.
“The global spirits market is massive, presenting opportunities for Australia to hedge its beverage trade exposure against changing consumption trends and geopolitical turbulence.
“Yet the Federal Government provides meaningful trade support for the wine industry alone, with wine exports concentrated on a handful of major markets.”
Australian Distillers Association chief executive Paul McLeay said that while the Australian Government is rightly working to stabilise trading relationships for established export industries, it cannot afford to be complacent about the immediate opportunity to unlock $1 billion worth of spirits exports.
“Australian spirits is a $112 million export industry presenting the opportunity for exponential growth that will also diversify Australian trade,” he said.
“Spirits are intrinsically high-value products that are almost infinitely shelf stable, so they are ideally suited to exporting and the world wants our distinctive Australian products.
“On top of that, 50% of Australian distilleries are located in regional areas, so there is immense opportunity for job creation in their communities.”
Spirits Export Accelerator Strategy in the spotlight
McLeay said the recent inquiry into Food & Beverage Manufacturing in Australia recommended that the Australian Government work with industry to establish a new body, ‘Spirits Australia’, similar to the existing statutory body, Wine Australia.
“We are calling on the Government to adopt the Spirits Export Accelerator Strategy (SEAS) proposed in our 2025-26 Pre-Budget Submission,” he said.
“SEAS will provide the framework for a Spirits Australia body that can replicate the success of Wine Australia, which helped Australia become the world’s sixth largest wine exporter.
“For a modest investment, which is a fraction of the $5.5 billion in excise paid by the industry, the Government can accelerate and realise the $1 billion export opportunity for Australian spirits, which we have demonstrated is achievable within a decade.”
The Spirits Export Accelerator Strategy includes targeted solutions for spirits manufacturers to navigate export opportunities in an increasingly volatile global trade environment. This includes:
- Trade tools – that recognise spirits’ unique route to market, while providing the training and support to upskill distillers to maximise export opportunities;
- Trade promotion – to build the profile and reputation of Australian spirits in export, and enhance our national food and drink narrative; and
- Product integrity measures – to protect the innovation that differentiates Australian spirits from global competitors and ensure the safety of Australian spirits in export, while ensuring Australia complies with its existing free trade obligations.
The strategy also includes an Export Tax Credit incentive to accelerate export growth in pursuit of the industry’s targeted $1 billion in exports.
Spirits and Cocktails Australia’s Greg Holland said that an export tax credit would offset the domestic excise paid by Australian spirits distillers based on how much product they ship overseas, sending an immediate market signal encouraging investment to pursue exports.
“In a turbulent and uncertain global trading environment, it has never been more important for the Australian Government to invest in industries with clear potential to grow exports and contribute to our economic prosperity, such as the Australian spirits industry,” he said.