In light of the 2 April tariff announcements by the United States (US) Government, this bulletin provides an update on Australian wine exports to the US wine market and on how the tariffs may potentially affect the market.
What tariffs have been imposed on Australian wine from the United States (US)?
The US Government has announced a 10 per cent tariff on all Australian goods entering the US, including Australian wine. The tariff took effect from 5 April. There is no ban on Australian wine exports to the US. Prior to this, Australian wine entered the US tariff-free under the Australia-United States Free Trade Agreement.
What do these tariffs mean for Australian wine producers?
While it is disappointing that the US has imposed tariffs on Australian wine, exporters can be assured there is still demand for our wines in the United States and in more than 100 global markets. Australia is currently ranked as the fifth largest exporter of wine in the world and is internationally recognised for the quality of its wines. As other major wine producing countries also face import tariffs in the US, Australian wine is not at a disadvantage to competitors such as France, Italy, Spain and New Zealand.
How is Wine Australia supporting exporters in the US market?
To help Australian wine engage with the trade in this challenging environment, Wine Australia is hosting a roadshow featuring a diverse array of Australian wines across North America from May 6 to 13. Trade and consumer events will be held in:
- Chicago – Saturday May 3, 2025,
- Toronto – Tuesday May 6, 2025,
- Montreal – Thursday May 8, 2025, and
- Washington D.C. – Tuesday May 13, 2025.
Will US demand for Australian wine be affected?
Imported wines account for around 30 per cent of total wine consumed in the US and Australia is ranked third in imported wines behind Italy and France. As the import tariffs apply to all major wine producing countries, Australian wine will not be at a disadvantage to competitors from Europe and other parts of the world. Because there are a number of factors to account for – how much of the increased cost importers will pass on to consumers, the effect of any global trade war on foreign exchange rates, and whether consumers will start to switch to domestic wines– it is hard to predict how this will affect Australian wine exports to the US in the short-to-medium term.
What do these tariffs mean for US wine consumers?
This tariff will likely ultimately hurt American consumers by increasing the price of wines they know and enjoy, adding further pressure to the cost of living. The tariffs come at a time when the US wine market is struggling to move past a surplus inventory that resulted from the COVID-19 pandemic and its aftermath.
According to the US Census Bureau, inventory levels remain elevated as consumption levels have not recovered. Total off-premise wine sales declined by 4 per cent in volume in the 12 months to December 2024, and while on-premise sales are slightly more robust, price increases of 20 per cent on average and shrinking wine lists and number of outlets means this channel has its own challenges. The import tariffs will only add to these pressures.
How much Australian wine is currently exported to the US?
In 2024, Australia exported 106 million litres of wine valued at $325 million to the US, making it Australia’s second largest market by volume and third largest market by value. Australian wine exports declined by 10 per cent in value and 21 per cent in volume while the average value of exports increased by 13 per cent to $3.06 per litre FOB.
The decline in exports was almost entirely driven by unpackaged wine after a surge in this category of exports in early 2023. Over 90 per cent of the volume of Australian wine shipped to the US was at an FOB value of under A$5 per litre, reflecting that Australia is the second biggest imported wine category in the US commercial wine segment (retail price of below US$10 per bottle) with a 19 per cent volume share. In comparison, Australian wine is the fifth biggest import wine category in the premium segment (US$10 or more per bottle) with a 5 per cent share. The tariffs are likely to have a bigger impact at the commercial end of the market as it is more price sensitive, and the margins are tighter.
How are Australian wine exports performing across other global markets?
In 2024, Australian wine exporters shipped wine to 119 destinations, up from 112 in the previous year.
Excluding the US, Australian wine exports to the rest of the world increased by 45 per cent in value to $2.2 billion and in volume by 15 per cent to 543 million litres. This growth was driven predominantly by exports to mainland China growing from $10 million to $907 million.
As a result of growth in exports to mainland China, the Northeast Asian region grew by 181 per cent in value to $1.18 billion (a 46 per cent total value share).
Southeast Asia declined by 23 per cent in value to $210 million, with almost all of these small, emerging markets declining year-on-year. This reduction doesn’t reflect a material change in demand, rather some exporters choosing to prioritise a re-stocking of their supply chains throughout mainland China. The long-term growth rate in value for the Southeast Asia region was still positive in the last 5 years.
Exports to Europe declining by 4 per cent to $521 million and represents 20 per cent of the total export value.
Within North America, exports to Canada grew by 9 per cent to $156 million.
What is Wine Australia doing to support trade and market access?
To mitigate impact on the wine sector, Wine Australia pursues a strategy of engagement with key international forums aiming to address market access issues. Wine Australia works with peak industry bodies in Australia and internationally to ensure the key issues confronting Australian wine exporters are addressed.
Our activities include participating in meetings of the World Wine Trade Group (WWTG), which is an affiliation of both sector and government representatives from Australia, USA, New Zealand, Canada, Chile, Argentina, Uruguay, South Africa and Georgia. The group has been very successful in negotiating binding international treaties covering winemaking processes and wine labelling. The WWTG also provides an invaluable platform for sharing intelligence and coordinating positions regarding obstacles to trade.
Usual issue topics include:
- trends in wine production, consumption and trade,
- developments in wine regulation and labelling, intellectual property and sustainability issues,
- changing viti-vinicultural practices,
- bilateral and regional trade negotiations, and
- wine issues in multilateral fora such as the Codex Alimentarius, OIV, and the WTO. Wine Australia is also actively involved in FIVS and the OIV.
We complement these influences on the international wine regulatory agenda by maintaining comprehensive Export Market Guides to the technical requirements of 40 major international wine markets.
We continue to monitor trade developments, negotiate arrangements to improve market access and streamline importing requirements, provide informed analysis and support to Australian Government officials, build relationships with regulators in key export markets and provide a response capability in the event of adverse developments. We also support winemakers’ strategies and underpin their efforts by promoting the diversity of Australian wine through coordinated and collaborative marketing initiatives in Australia and overseas. We share stories about the natural advantages of the unique and diverse grapegrowing attributes of Australia and its terroirs that are brought to life by the winemakers.
We identify opportunities to help bring great Australian wines to the world’s retail shelves, online offerings and wine lists, and ensure that they are included in positive conversations across all media. We have established networks across the world’s trade channels, media, wine educators and influencers, and we work closely within these networks to deliver events and activities that reflect our market strategy and benefit Australian wine producers. Wine Australia’s international team exists to support Australian exports, with staff based in North America, the United Kingdom, China and Japan.
What restrictions are there on US wine imports to Australia?
There are no restrictions on US wine entering Australia and they enter tariff-free under the Australia-United States Free Trade Agreement. Australia and the United States are also both parties to the WWTG’s Agreement on Mutual Acceptance of Oenological Practices and other WWTG agreements.