US tariffs on Australian wine could deal a major blow to entry-level exports, with the industry fearing prices will rise enough to risk a key market being swallowed up by bulk American wine.
The blanket 10 per cent tariff on all wine sent to the US - which is the nation's third-biggest export market - will have a profound impact on a sector still struggling after three years of Chinese tariffs, Taylors Wines managing director Mitchell Taylor said.
"The trade minister rang me and pointed out how we did very well, relatively, but the industry has been going through ... the most difficult time in the 40 years I’ve been in it,” the South Australian winemaker said.
About 80 per cent of the wine going into the US market is entry level, and the 10 per cent tariff "multiplies all the way up the alcohol distribution chain” according to Mr Taylor.
“All of a sudden, the $5-7 bottles will be up over $10 and the excess, cheap California wine will just come in and swallow up that market,” he said.
Australia exported $325 million of wine to the US in 2024, according to Wine Australia.
DMG Fine Wine managing director William Dong said there was relief that the tariffs were not 20 per cent-plus as the industry had feared.
Yet it will still greatly impact entry-level wine producers as the market becomes more price-sensitive and consumers cut back on spending, he said.
Australia was in a better position than markets such as Europe where the tariff levels imposed are much higher, according to Mr Dong.
“Consumers will be open to exploring more affordable alternatives that still deliver quality and provenance. We have a unique opportunity to provide that and gain a foothold in the market,” he said.
The chaos and uncertainty created by President Donald Trump creates havoc in the supply chain, Mr Taylor said.
“So it's very hard to get orders from not only the US, but from other countries because consumer confidence goes south when you've got all these inflationary pressures and talk of a world recession,” he said.
One positive is potential in the Canadian market because the Liquor Control Board of Ontario has taken all US wines off their shelves, according to Mr Taylor, who said government support would necessary.
