Q&A with wine law experts about tariffs, immigration

These six wine law experts based in the North Bay answer our questions about supply and demand, the workforce and what the tariff war means for the wine industry.

Answers have been edited for clarity and space.

What legal avenues are available to mitigate shifting policies on tariffs, trade and import-export regulations?

Brandi Brown & Michael Maher: The domestic wine industry is facing a challenging landscape – uncertainty arising from President Trump’s tariff policy has compounded an already slowing growth forecast and demand slump. It’s time for wineries to reassess their supply chains (geographic origin of resources) and sales channels (geographic point of sale), as well as their existing commercial contracts.

In particular, wineries should review their existing commercial contracts to determine any rights (of either the winery itself or the counterparty to its contract) to delay payment and/or terminate due to commercial impracticability or force majeure events – unforeseen events not caused by the party that make a contract’s performance extremely difficult. Such may be the case with 200% tariffs on imported wines or on foreign sourced supplies (e.g., oak barrels, aluminum for packaging, glass, corks, and bulk wine) that a party committed to purchase. Barring an express contractual right to terminate due to government actions, a mere increase in cost to perform may be insufficient to excuse a party’s performance of the contract.

If the commercial contract does not provide an express remedy to guard against tariffs, regulatory changes or other governmental acts, the winery could consider renegotiating the contract. If the winery is the purchaser under the contract, given the volatility in tariff schedules from week-to-week or month-to-month, it could consider renegotiating payment terms to delay or spread out payment obligations or, where practicable, delay delivery of major purchases that would be impacted by today’s tariffs. On the other side of the equation, if the winery is the seller under the contract, it should consider requiring advance payments and, if delivery is made prior to payment, ensure that it perfects and maintains any available security interests in the goods sold.

Michael Brill Newman: President Trump’s recent executive order applies a baseline tariff of 10 percent on all imports into the U.S., pursuant to the International Emergency Economic Powers Act (IEEPA), effective April 5, 2025. The executive order also imposed additional reciprocal tariffs on several of the top countries supplying wine to the U.S., including a 20% tariff on imports from the European Union, a 10 percent tariff on imports from Chile, Australia, New Zealand, and Argentina, and a 30% tariff on imports from South Africa. This reciprocal tariff was set to become effective April 9, 2025 but is currently subject to a 90 day pause. U.S. wine distributors may be substantially impacted by the tariffs on imported wine. Additionally, domestic winemakers may also be impacted if they source barrels, corks, bottles, and other production and farming equipment internationally.

While the tariff regime does not yet appear to be set in stone, there are several legal avenues to mitigate the effects of the shifting policies on the U.S. wine industry. First, winemakers and distributors should evaluate their supply chain from a regulatory perspective. Identifying the countries of origin, customs classifications, and valuation of products and equipment used in the supply chain will be helpful in minimizing the total amount needed to be paid under the new tariffs. Second, understanding existing contractual obligations with suppliers can open avenues for negotiating prices for imported products to reduce the total cost passed on to the consumer. Finally, while there are currently no formal exemptions to tariffs available, there may be political avenues to make a case for specific industry sectors.

Katherine Philippakis: Fortunately, most of the wines produced in the United States are also sold in the U.S. Wineries have an export presence, but generally it is a relatively small volume of their sales. Thus, for most U.S. wineries, the easiest solution will be to focus on expanding domestic markets – particularly through direct-to-consumer channels – and pulling back exports from any markets subject to tariffs.

For foreign wineries importing into the U.S., they should consider creating a U.S. presence through acquisition of domestic properties and/or brands. This would allow foreign producers to reclassify certain of their products as domestic goods, which would be exempt from tariffs. A variety of foreign wineries have established U.S. brands in the past and have done well with them (for example, Mumm Napa), and this also gives foreign wineries diversification of investment portfolio, moving some of their assets and out of foreign markets.