Tariffs, Federvini: “US market irreplaceable, EU must avoid retaliation. Impact would be devastating”

by Andrea Francato

Milan – “We have asked Italian and European institutions to take action without delay to remove U.S. wines and whiskeys from the European tariff list. This is another essential step to defuse dangerous retaliation on our sector.” This was explained to GEA by the Director General of Federvini, Marco Montanaro, regarding the announced U.S. tariffs on imports of wines, spirits, and liqueurs from EU countries. As of April 2, in fact, the 200 per cent tariff on these products, as announced by President Donald Trump, could come into effect. Numbers that make your blood run cold, considering that almost €2 billion are at stake for Made in Italy wine alone.

Montanaro confirms the momentum of waiting and uncertainty for companies ahead of next week: exports to the U.S. are at a standstill after the recommendation of the Wine Trade Alliance, the association that brings together U.S. wholesalers, producers and retailers. “No more wines, spirits, and liqueurs are being imported into the United States at the moment. U.S. traders have indicated they cannot order products with a tariff risk. The products take several weeks to arrive. Therefore, Italian companies are trying to manage trade flows, including by allocating products to other markets.”

Businesses are holding their breath, but they must prepare for the worst. Among the consequences is, of course, the loss of large market shares in the US to the benefit of international competitors exempt from such heavy tariffs (Argentina, New Zealand, Chile, and Australia, to name a few). “If US-EU tensions continue,” Federvini’s director general confirms, “we will have to identify possible outlet markets for all stocks and products that would no longer be exported to the US or could be exported at significantly higher prices.

For now, however, there’s hope for a diplomatic breakthrough. On this, Montanaro is clear: “Federvini reiterates its no to tariffs on wines and spirits and, at the same time, expresses its yes to the protection of transatlantic relations. The US market is the first destination market and is not replaceable. The impact of tariffs and possible trade retaliation would devastate a sector with 40 thousand companies, a turnover of more than €20 billion, a total of 10 billion in exports globally, 460 thousand employees and millions of consumers.” The Italian case is peculiar because, unlike other countries, the three product categories that Federvini deals with (wine, spirits, and vinegar) are deeply integrated—a difficult blow to absorb.

Difficult, even according to Federvini, to estimate the true extent of US measures. “We need to understand which supply chains will be affected and then ask the EU, through diplomatic initiative, to remove tariffs on whiskey and bourbon and thus defuse possible retaliatory measures by the United States. Diplomacy right now is working intensively to reduce the announced duties or otherwise find shared solutions that can avoid affecting sectors such as agribusiness,” explains Montanaro, who is ultimately keen to stress “the importance of keeping wines and spirits out of trade disputes that do not concern the wine, spirits sector, controversies that originate from tensions involving aluminium, steel, electric vehicles. We talk about tariff asymmetry because they hit products that have nothing to do with American claims. Hitting wine just doesn’t make sense.”