Donald Trump's Proposed Tariffs Could Change The Way You Eat At Restaurants

The price of wining and dining could get a little more painful if President Donald Trump serves up a course of sky-high tariffs in his second term. Tariffs are import taxes levied against foreign imports that are meant to encourage a domestic edge and boost federal revenues. However, domestic customers end up eating the cost of tariffs in the form of upped prices, less availability, and retaliatory tariffs. Tariffs can seriously impact family budgets, and make Americans scale back on eating (and drinking) out in what might be some hungry, thirsty years.

Trump has pitched tariffs between 10%-60% on foreign imports from top U.S. trade partners. The entire food and beverage industry could be affected if the self-proclaimed "Tariff Man" makes good on his campaign promises to impose increased tariffs. 

Suppliers, distributors, business owners, and all industry workers could see price spikes, shortages, and shifted supply chain due to tariffs on foreign imports, but a significant shift could occur if imported alcohol products like wine and beer are hit with tariffs. Even if you're a non-drinker, tariffed alcohol could make dining out look unappetizing if the price of wine, beer, and an entire restaurant's food menu goes up, and availability goes into short supply. Fine (and not-so-fine) dining establishments and their customers stand to suffer the effects of increased tariffs on restaurant alcohol, and the uncertainty plated up with them.

The average American spends a significant amount on alcohol each year. The bulk of that alcohol spend happens at restaurants and taverns, per a Statista report. In 2023, the National Restaurant Association analyzed sales data via its "Trends in On- and Off-Premises Beverage" report, finding that alcoholic drinks made up 21% of sales at full-service restaurants, and 6% of sales at limited-service establishments.

Restaurants tend to run on razor-thin profit margins, with full-service restaurants usually falling within the 3-5% range. Much of a restaurant's profit doesn't actually come from food sales, as customers are highly sensitive to food markups, and may head elsewhere or stay at home if food is priced beyond the pale. However, alcohol sales within these restaurants can be a major profit driver for a restaurant. Typical beverage profits between 50%-60%, or even up 80%, from beverage sales can be what keeps a restaurant's food prices within a reasonable range.

Without saying anything about how Trump's proposed tariffs could impact the job market regarding the restaurant industry, nor the impact of tariffs on goods we buy from Mexico or other top food supply trade partners, increased tariffs on imported alcohol, even at the conservative estimate of a 10% increase, could upend the restaurant ecosystem as we know it — let alone the price of a good bottle of champagne.

The United States is the top wine-consuming nation in the world, per a report from international wine research company, the International Organisation of Vine and Wine (OIV). Per OIV data, the U.S. falls in the top three global importers of foreign wines, by value. The U.S. is also a top wine exporter, with over $1.23 billion in export values reported in 2023 alone, per USDA data. Any tariffs placed on foreign wines will likely see retaliatory tariffs on U.S. wines, as well.

The U.S. imports wine through a three-tier system designed to generate tax revenue. A U.S. importer purchases wine from a foreign maker, then sells the wine to a U.S. distributor, who sells the wine to a restaurant, who sells to their customers. At each tier, price markups for import and alcohol taxes are passed up and along into the wine's price. Per trade publication Sommelier Business, the average cost of restaurant wine can be anywhere from 200-300% higher than the wholesale price a restaurant pays for it. This means most bottles of wine bought at a restaurant cost diners twice what they would pay for the wine at a store.

Increased tariffs may increase that markup procedure multifold. In turn, that newly astronomical cost could cause restaurateurs and smaller wine distributors to cut costs by cutting staff, or shutting down. Increased tariffs on wine and alcohol could shutter restaurants that can't profit without a beverage program, or at least undermine their quality of service. That means less choices for consumers, and higher prices for the dregs of choices that remain.