The Trump Administration has sent shockwaves through the drinks industry after unveiling minimum tariffs of 10% on all countries, with heavier duties on about 60 countries.

The tariffs were announced using the US International Emergency Economic Powers Act, which has never been used to enact such major changes to economic policy. 

While the President has gleefully called the announcement “Liberation Day”, the Sydney Morning Herald Senior business columnist Stephen Bartholomeusz has described the tariffs as the “most self-destructive set of policies in modern American economic history”.

“They will diminish US and global growth, increase US inflation, act as a regressive tax on US consumers and provide a pandemic-like disruption to global supply chains,” he said.

“Trump’s tariffs will raise revenue – the best guesstimate is around $US600 billion a year – but, contrary to what he constantly (and falsely) asserts that revenue won’t come from the countries on which the tariffs have been imposed but from US companies and consumers.”

And it resulted in carnage on world share markets as the full impact of the tariffs sank in.

Australia, which just recorded a trade surplus with the US for the second consecutive month, got off fairly lightly with a 10% tariff on alcoholic beverage exports to the US. The sector is Australia’s 13th biggest export to the US and was worth $399.4 million by value in 2023-24.

But the reverberations will still be felt here, as the impact of tariffs on other trading partners inhibits economic growth.

Development Intelligence Lab CEO Bridi Rice told ABC News: “It’s time for Australia to recalibrate our strategic assumptions — the potential of less regional growth, more poverty, declining US influence and the following entrenchment of authoritarianism creates a dangerous cocktail for regional instability.

“This is geo-economic fallout at its worst.”

Spirits take a hit

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

Distilled Spirits Council of the United States (DISCUS) CEO Chris Swonger called for a return to “zero-for-zero tariffs”.

“We urge President Trump to liberate the US spirits sector from these tariff disputes by negotiating deals that get us back to fair and reciprocal zero-for-zero tariffs for spirits products,” he said.

Swonger noted that many spirits sold into the US such as Irish whiskey, Cognac and Scotch “cannot simply be moved to another country or region”.

“A return to zero-for-zero tariffs with our key trading partners will enable the 3100 distillers across the United States to partake in the limitless growth opportunities that exporting has to offer,” he added.

“We recognise that President Trump is working to secure fair and reciprocal trade and stand ready to work with the administration to untangle the spirits industry from the recent trade disputes so we can resume zero-for-zero trade with our major trading partners.”

As the US has a trade surplus with the UK, its producers hoped to avoid tariffs, but were hit with 10% along with the rest of the world. The US is the most important market for Scotch whisky exports.

A spokesperson for the Scotch Whisky Association said: “The industry is disappointed that Scotch Whisky could be impacted by these tariffs. We welcome the intensive efforts by the UK government to reach a deal with the US administration, and we continue to support this measured and pragmatic approach towards a mutually beneficial resolution.”

Products from Japan have been hit with a tariff of 24%. Suntory President Nobuhiro Torii said the company may shift its whiskies to its home market and other Asian nations where demand is high.

“If prices of Hibiki and Yamazaki become up too high for US consumers, we have an option of simply changing the target market,” he said.

Suntory has already shipped European alcohols used to make ready-to-drink beverages and Mexican tequila to the US “significantly ahead of schedule” in anticipation of the tariffs, he said.

The US is the largest market for French wine and spirits, with shipments to the US rising 5% in 2024 to 3.8 billion euros.

French wine and spirits exporters group FEVS chairman Gabriel Picard has described the 20% tariff on EU beverages as colossal.

“It will have a very significant impact on business in the United States … a very significant impact on the American consumer,” he told Reuters.

Victor Yarbrough, CEO at Brough Brothers Distillery in Louisville, told the Wall Street Journal he was concerned about retaliatory tariffs hampering his overseas expansion plans. 

“We are certain the EU is going to retaliate,” said Yarbrough.

He also wondered how much money US consumers would have to spend on his bourbon or rum if everything else gets more expensive.

“It boils down to how much disposable income does one family have?” he said.

Cocktails and bar industry under threat

According to Reuters: “US 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 US President Donald Trump’s reciprocal tariffs.”

“Many labels, which cannot be replaced by local production, will disappear from the tables of US consumers, while a serious production and employment crisis is looming in Italy and Europe,” Micaela Pallini, president of Italian trade association Federvini, said.

W. Blake Gray Wine Searcher also noted that cocktails are about to get a whole lot more expensive in the US, as “the price of just about every cocktail ingredient just went up: Vermouth, many liqueurs, even many bitters and fancy cocktail cherries”.

Canned beer industry in turmoil

Immediately prior to Trump’s Liberation Day speech, his administration expanded its 25% tariff on aluminium to include imported canned beer and empty cans.

The Commerce Department confirmed in a Federal Register notice that the duties on beer made from malt and empty aluminum cans would be collected starting at 12:01 a.m. EDT on April 4.

There are concerns that the ban on imported empty cans will impact the US craft beer industry as there are currently not enough domestic supplies to fulfil demand.

However, the sweeping tariffs announced on April 2 will have widespread ramifications for brewers outside the US, which is the world’s largest import market for beer.

“Whilst there is an 20% tariff on all EU products, it is the addition of Beer to the Annex 1 list of aluminium derivative products facing a 25% tariff that is particularly concerning to Europe’s 10,000 breweries,” Brewers of Europe Secretary General Julie Leferman said.

“The US is European brewers’ second most important export market for beer in both value and volume terms. We are currently seeking further clarity on the exact products captured by this new announcement.

“Brewing is a key driver of growth, investment and employment on both sides of the Atlantic and a major part of people’s lives on both continents. With value chains that stretch from the farmers grafting in the fields to the hardworking staff in the bars, it is critical to de-escalate and work towards a solution that cuts tariffs on beer and thus benefits consumers, workers and businesses in both the EU and the US.”

US drinkers favour imported beer

Data released by online research data and analytics group YouGov shows imported beers are outperforming domestic brews in terms of popularity.

The top three most popular beers in the US in quarter of 2024 were Heineken, Guinness and Corona. The highest ranked American beer was Miller in fourth place.

Fortunately Norfolk Island Brewing doesn’t export to the US, as the tiny Australian island was inexplicably hit with a 29% tariff.

The announcement made it among the 30 hardest-hit territories globally.  

“There are no known exports from Norfolk Island to the United States of America and no tariffs or known non-tariff trade barriers on goods coming to Norfolk Island,” an island spokesperson said.

Wine industry reels from tariff announcements

Winemakers in Australia, New Zealand, Chile and Argentina were handed a 10% tariff on their products, which was less damaging than the 20% tariff faced by the EU and the 30% tariff slapped on South Africa.

Wine Searcher noted: “Elon Musk’s home country got slapped with 30% tariffs that will basically kill their market in the US. The US is only South Africa’s fourth-biggest wine export market after the UK, other African countries combined, and the Netherlands. But South African wineries hoping to sell US-bound wines to other countries are going to face tough competition from every country in the world trying to do the same thing.”

The US is the third-largest market for South African wine.

“This tariff threatens our exporters and increases costs for US consumers who have embraced South African wines for their quality and value,” Wines of South Africa told its members.

US Wine Institute responds to tariff announcement

Wine Institute, the public policy advocacy group of more than 1000 California wineries and affiliated businesses, said it continues to strongly advocate for the removal of wine from all trade retaliation lists, regardless of the market.

President and CEO Robert P. Koch said wineries across the country continue to suffer economic harm from Canada’s total ban on US wine sales.

Since early March, wine, beer and spirits have been the only U.S. products completely barred from entering and being sold in the Canadian market. Prior to these actions, Canada accounted for 35% of all US wine exports, with a retail value of more than $1.1 billion.

“Today’s announcement of new tariffs will only make it harder for American wineries to regain access to Canada, by far our most important export market. In early March, Canada cleared its shelves of all US wine and continues to block its sale. As this dispute drags on, it is creating economic instability at a time when the industry is already under significant pressure.

“This isn’t just about trade. It’s about people, livelihoods and an agricultural success story built over generations. When our industry is disrupted, the impact reaches far beyond the winery — affecting farmworkers, distributors, small businesses, restaurants and entire communities across the country.”

Australian winemakers react to 10% tariff news

The 10% tariff on wine exports to the US comes almost exactly a year after China lifted its tariffs of up to 175% on Australian wine.

Ironically, the Chinese Ministry of Commerce condemned the US tariffs as “typical unilateral bullying practice” and urged the US to cancel them and “properly resolve differences with its trading partners through equal dialogue”.

The US was Australia’s second biggest wine export market by volume in 2024, at 106 million litres.

Taylors Wines Managing Director Mitchell Taylor told the Australian Financial Review that the US market represented about 10% of the company’s international sales.

“These US tariffs are really bad for the Australian wine industry. This will accelerate the oversupply that we are still dealing with from the China experience,” he said.

He added that the complex three-tiered wine distribution system in the US would make the impact on wine prices more than 10% because of the need to go through importers and state wholesalers.

“It will be inflationary for US wine consumers,” he said.

Treasury Wine Estates said it did not anticipate the tariff on Australian and New Zealand wines would have a “material impact on its business”.

In the first half of TWEs 2025 financial year, around 85% of Treasury Americas’ “brand contribution” was from US-produced wines such as Daou, Frank Family Vineyards and Beringer.

About 15% or $35 million, in its products are imported from Australia and New Zealand, primarily for its 19 Crimes and Matua brands.

However, despite TWE’s assurances its shares dropped 2% following the news.

Con-Greg Grigoriou, founder of Delinquente Wine Co. and fourth-generation producer in South Australia’s Riverland wine region told Smart Company the tariffs would have a larger effect on French, Italian, and Spanish wines than Australian ones.

“I’m more interested and worried about the effects of tariffs in general on the US economy and on consumers’ purchasing power,” he said.

Australian Government announces rescue measures

Following the tariff announcement, the Australian Labor Government promised $1 billion in zero-interest loans for exporters to combat the “Liberation Day” tariffs.

If re-elected the Albanese Government said it would also launch a renewed push to sign new free trade agreements with the EU and India, Trade Minister Don Farrell said, and launch five new trade missions to key export markets.

Austrade has updated its Go Global Toolkit to provide further information on the tariffs and has scheduled a public webinar for 11am on April 9 to address industry concerns.

Federal, State and Territory department representatives will join the webinar for an update on the tariffs and support measures available for businesses navigating the changes. Learn more here.

Wall Street wipe out

US markets saw their steepest decline since the early days of the pandemic following the announcement of the sweeping new tariff plan.

At 4pm in New York the Dow sat at -4%, S&P 500 was at -4.8% and Nasdaq -6%. The combined losses are sitting at around $US3 trillion and rising.

Wall Street’s chief fear measure — the Cboe Volatility Index — was expected to finish the day above 29, with a rise above 20 the usual indicator of concern among traders.

International Monetary Fund head Kristalina Georgieva said: “We are still assessing the macroeconomic implications of the announced tariff measures, but they clearly represent a significant risk to the global outlook at a time of sluggish growth.

“It is important to avoid steps that could further harm the world economy. We appeal to the United States and its trading partners to work constructively to resolve trade tensions and reduce uncertainty.”

President’s verdict

President Trump reiterated to reporters outside the White House that his tariffs were going to have a positive impact on the US.

“I think it’s going very well,” he said. “We have $US6 or $US7 trillion coming into our country and we’ve never seen anything like it.

“The markets are going to boom, the stock is going to boom, the country is going to boom and the rest of the world wants to see is there any way they can make a deal.”

He then flew to Florida for a golf tournament at one of his resorts, Reuters reported.