Portuguese wine could lose more than 20% of its US market share with 15% tariffs

Although negotiations are ongoing that could still include alcoholic beverages on the list of tariff-free products for the United States, starting August 1st, European wines and spirits destined for the country will indeed be subject to a 15% customs duty . If this tariff is maintained, Portuguese wine could lose more than 20% of the North American market, which last year brought in over 100 million euros , industry representatives warn.

The agreement reached on Sunday between US President Donald Trump and European Commission President Ursula von der Leyen established a 15% cap on US customs duties on most European goods and tariff exemptions for certain products. Although the final text has not yet been finalized—many details and negotiations are still ongoing—the agreement brought predictability to business, ending a period in which entrepreneurs were "in the dark" about how much their products would have to pay to enter the US.

The Portuguese wine sector, which sold €102 million to the US in 2024 (10.58% of total national exports) , welcomed the end of uncertainty, but highlighted the high costs that tariffs of this magnitude could bring to the sector. "The 15% [tariff] isn't good. It causes us some difficulties. Our direct competitors, such as Australia and China, have tariffs of 10%," Frederico Falcão, president of ViniPortugal, told ECO.

The official acknowledges, however, that this scenario brings " predictability." "Knowing what we can expect, even if it means a 20% decrease in orders, or perhaps even more," makes the business more predictable , the industry spokesperson states. This predictability is valuable for wine exporters to the US, which were once threatened with 200% tariffs and saw many customers freeze orders until there was greater clarity on trade policy.

However, an increase in the tax to 15%, above the current 10% paid by other European wine competitors , is expected to result in price increases of over 20% for North American consumers, which will be reflected in a drop in demand, explains Frederico Falcão. " The drop in consumption will most likely be over 20% ," he estimates.

Despite these predictions, Frederico Falcão remains optimistic about the ongoing negotiations, particularly regarding tariff exemptions. " We have a strong expectation that [the wine sector] will end up with a zero tariff. Negotiations are ongoing ," he said in a statement to ECO. He is confident that there will be "good news" in the coming years, avoiding this more negative scenario for the sector.

There's still room for Portuguese wines to raise prices and remain competitive. We're at a very low price point in the US market.

Bernardo Gouvêa, president of the Institute of Vine and Wine (IVV), also admits that the imposition of tariffs will result in a drop in demand. However, like the president of ViniPortugal, he still believes it's possible to add wine to the list of tariff-exempt products. "It would be good if wines could enter the 0% tariff regime," he states. If that doesn't happen, he argues that " there's still room for Portuguese wines to increase their prices and remain competitive. We're at a very low price level in the US market," he emphasizes.

"It could even be an opportunity to improve price positioning in the US. Even with higher prices, Portuguese wines don't become 'uncompetitive,'" argues IVV president Bernardo Gouvêa. Bernardo Gouvêa believes that " the smart thing to do is to strengthen promotional and marketing efforts" to position Portuguese wines in a higher price range.

The president of the public institute also notes that the imposition of these tariffs will "require producers to be more focused on monitoring the market" and will have to strengthen negotiations with distributors. Even so, he emphasizes that "all countries will have some type of tariff." Even though the rate paid by Portuguese wines is higher than that imposed in the United Kingdom, Australia, or China.

Paulo Amorim, president of the National Association of Wine and Spirits Traders and Exporters (ANCEVE), warns that Donald Trump's tariffs are the "perfect storm that will make the 2025 harvest even worse than the 2024 harvest in terms of drama for the Portuguese wine sector."

Europe didn't want to retaliate, and I think that was a strategic mistake. It was left in a very disadvantaged position.

Regarding the agreement reached last weekend, Paulo Amorim is not shy in his criticism: "It was a terrible deal that once again seriously undermines Ursula von der Leyen's image." "Europe didn't want to retaliate, and I think it was a strategic mistake. It was left in a very marginalized position, and von der Leyen played a regrettable role by going to see the US president at a hotel she owns in Scotland " to sign an agreement. "This was, in practice, a major public relations operation by the US president, who is grappling with the massive Epstein scandal," he stated.

Paulo Amorim also considers it "regrettable" that the United Kingdom, which left the European Union and lacks the same "firepower," managed to negotiate lower tariffs of 10% on its own. The ANCEVE leader also laments the months of uncertainty surrounding tariffs, which impacted sales to the country. "Imports were blocked as early as March. Importers stopped placing orders at a time when Portugal's wine exports were growing [in the first quarter]. Right now, they're falling significantly due to the problem in the United States," he explains.

"For the distribution system in the US, it's terrible and will lead to many layoffs and even company bankruptcies, because distribution and import companies in the US are highly dependent on Italian, French, Spanish, and, to a lesser extent, Portuguese wines ," he says. Paulo Amorim summarizes that these agents can't "survive" on Californian or Chilean wines alone. "For them, having European wines is vital," he points out.

João Gomes da Silva, executive director of Sogrape, acknowledges that this decision to apply 15% tariffs on European wines starting August 1st " represents a significant challenge for the wine sector." In Sogrape's case, the US is its third most important market and "a strategic destination for several brands in its portfolio." "Although the reduction in the initially planned tariff [20%] to 15% is a positive sign, the short-term impact could still translate into a decline in demand due to price increases," says the manager of Portugal's largest wine company.

"Sogrape is working closely with its local importer to mitigate the effects of this measure, ensuring the competitiveness and value of its offering, and remains committed to North American consumers and partners," adds João Gomes da Silva, who acknowledges that "the uncertainty since the end of 2024 has already led to a market contraction." "The imposition of these tariffs, due to their impact on prices, is bound to result in a decline, even if temporary, in demand," he admits.

The imposition of these tariffs, due to their impact on prices, cannot fail to imply a reduction, even if temporary, in demand.

Sogrape emphasizes that "the structural impacts are the result of very complex circumstances and, therefore, difficult to anticipate at this time, but no possibility should be ruled out." The fact that the Vila Nova de Gaia-based group has its own importer in the US allows for a more agile and flexible response, "essential for adapting marketing and logistics strategies."

Despite these difficulties, he is confident that "through dialogue and cooperation, it will be possible to overcome the current challenges and continue to grow in a strategic market for the group." "We trust in the strength of our brands and the close relationships we have cultivated over the years with our partners and consumers, who continue to show a growing interest in Portuguese wines," he concludes.

Tomás Roquete, administrator of Quinta do Crasto, emphasizes that, last year, the Douro estate exported "practically zero" to the US due to a problem with an importer. However, he reveals that he has the " ambition that the US will one day return to being the company's largest export market," recalling that from 1997 to 2010, it was Crasto's main export market . After 2010, the Brazilian market began to gain momentum and became the main market. "The US hasn't kept up with Brazil's growth," he reports.

A 15% rate is high, but it's not a deal-breaker.

"The US has enormous potential to become our main export market again," says the administrator of Quinta do Crasto, lamenting that with the 15% tariff, "expected growth this year in the United States won't be as strong as it would be without the tariffs. " A "15% tariff is high, but it won't decapitate the business," says Tomás Roquete, suggesting that the tariff be absorbed by both the producer and the importer.

"Canada, meanwhile, has removed all American wines from its shelves, and perhaps some opportunities will open up here for wines from other parts of the world," he adds. "We need to understand whether the 15% figure becomes an opportunity compared to other countries with 20% or 25%, or whether it becomes a weakness because others only had 10%," notes Tomás Roquete.

Speed in the Mercosur agreement

One way to offset the US's shortfall is to open new markets, which can be achieved by unlocking other agreements. " The Mercosur agreement is once again an example of Europe's slow pace and lack of internal cooperation (...) This agreement could be very beneficial for Portugal in the Brazilian market, which is a strategic market for us, and where we could significantly increase sales and offset some of the losses we will face in the US market," says the president of ANCEVE.

The president of the Luso-Brazilian Chamber of Commerce and Industry (CCILB) also said last week that the tariffs imposed by the US president could serve as a catalyst for an “urgent” rapprochement between Mercosur and the European Union.

Otacílio Soares da Silva Filho sees this scenario as a “strategic opportunity” to accelerate understanding between the two blocs and provide new opportunities and commercial scenarios for the Brazilian market.

The proposed free trade agreement between the EU and Mercosur, which remains to be ratified after decades of negotiations, appears to be a central instrument for "rebalancing international economic relations and strengthening South-North cooperation," the official emphasizes.

For Otacílio, the entry into force of the EU-Mercosur agreement could serve as a “regulatory and institutional anchor, promoting bilateral investments, qualified employment and technological advances in both blocs.”

The leader of the Luso-Brazilian Chamber of Commerce and Industry notes that combined, Mercosur and the European Union represent a market of over 700 million people and a Gross Domestic Product of nearly $22 billion . For Otacílio Soares da Silva Filho, this potential must be harnessed with "pragmatism, overcoming political resistance and internal barriers."