According to the California Wine Grape Growers Association, a 29% tax on imported wines in Australia is “unfair and uninherited trade practices.”
American winemakers have joined high-tech companies, beef producers and pharmaceutical manufacturers to demand that US President Donald Trump impose large tariffs on Australia’s imports.
The California Wine Grape Producers Association (CAWG) is facing a problem with a 29% tax on imported wines in Australia.
The formal complaint was filed with the US Trade Representative, but the final decision depends on the president.
CAWG claims that the “influx of cheap, imported bulk wine” into the United States has led many to “out of business at an incredible rate” of farmers who have grown grapes for generations.
The organization acknowledges the issue as “subtle” and note that tariffs in other countries not only put American growers at a disadvantage, but many foreign competitors also benefit from reduced production costs and “often generous public subsidies.”
The Australian government has benefited the local wine industry with rebates, $100,000 grants, loans and financial support, calling it “distorting the competition” for US winemakers.
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But while suing that lawsuit to Trump, CAWG is not optimistic that they will resolve the issues they are facing.
“Despite the attention surrounding this latest tariff threat, tariffs of this magnitude are unlikely to be implemented in a sustainable or long-term manner. However, this moment provides a valuable opportunity to address the need for an equal playing field for California wine grape growers.”
Picker will empty newly selected semilom grapes into wooden frames during harvest at Grand Awine in Hunter Valley, New South Wales, Australia on January 11, 2024. The Valley is Australia’s oldest wine-growing region, with Shirazwein dating back to 1867. Roni Bintang/Getty Images
Bottled wine is a problem, but “substantial and direct threat to California’s Wine Growers” is the import of bulk wine (wine shipped from wine shipped to large flexible tanks, bladders or containers).
“Foreign bulk wines have flooded the US at sub-market prices, allowing businesses to bottle and sell under the familiar “American” brands, misleading consumers and domestic farmers. In 2024, an estimated 300,000 tons (272,000 tons) of California wine grapes were wasted and 38 million gallons (44 million liters) of cheap wine were replaced.
“Among all the noise on tariffs, a crisis is unfolding in the real, very realistic California wine country. Wine Growers and Wineries are forced to make impossible decisions: torn the vineyards, finish the family business and stop operations.”
It also warns that tariffs the president decides to impose could be denied by other programs.
President Donald Trump will leave the U.S. Capitol following a luncheon for Irish friends in Washington on March 12, 2025. Anna Money Maker/Getty Images
“The current form of federal obligation drawback system further encourages imports by allowing businesses to request import operations and excise tax refunds, giving imported wine a competitive advantage in the US market,” says Cawg.
“This flawed program could effectively negate tariffs if a company can simply recover those costs through job shortcomings.”
Australia encourages wine grown for tourism
Australia supports the wine industry.
The Wine Tourism and Cellar Door Grant Program allows wine and cider producers to apply for grants of up to $100,000 to sell eligible cellar doors.
The government has previously provided $60 million through the program, and will support grape growers, but it targets Australian cellar door sales as part of its tourism promotion, and will not directly affect exports.
There is also support for research and development through research and innovation (R&I) funding programs, which are partially funded through collections from growers.
Last year, the government announced a one-off $3.5 million grant package to support the industry’s long-term viability after dealing with an oversupply of red wine.
Despite the popularity of bold red varieties such as Australia’s Shiraz, the industry discovered itself in a massive chunk of red wine last year and received government subsidies to help. Roni Bintang/Getty Images
And Australian winemakers, along with other major producers, will benefit from initiatives such as $2 million last year to help farm exporters reestablish China’s commercial ties and continue to diversify into other markets.
However, unlike Australia, where alcohol consumption has steadily declined since around 1990, it has grown at the same time in the United States.
US Incentives for Local Growers
However, CAWG members also benefit from generous government assistance.
CBMTRA (California Beverage Maker Tax Credit) provides tax credits for wineries of any size calculated based on the number of gallons produced.
The formula is: $1.00 per first 30,000 gallons. $0.90 per gallon of 30,001-130,000 gallon. $0.53 per gallon, between 130,001 and 650,000 gallons. It applies whether the wine is exported or not.
US wineries and their peak organizations can also apply for grant money. This can be used for market research and help you determine whether a particular market will benefit your business.
