Corks exempt from 15% tariff in the US
Closures manufacturers are celebrating as Trump announces that cork stoppers will not be subject to the 15% tariff applied to most EU products exported to the US. Sarah Neish reports.
According to the trade agreement between the United States and the European Union, from 1 September cork joins the likes of airplanes and certain pharmaceuticals in being exempt from the 15% tariff slapped on EU goods exported to the US.
Described by the latest US regulations as an “unavailable natural product”, cork will be able to be exported to the United States without the additional tax. The decision comes as a relief for key players in the Portuguese cork industry, who have been lobbying for the tariff reprieve for some time.
Speaking exclusively to the drinks business, Nuno Silva, marketing manager for leading Portuguese cork manufacturer MA Silva, praised the “unique status” awarded to cork, which “ensures that no tariffs are applied to cork and its derivatives — especially the iconic cork stopper.”
Calling the exemption “much more than a trade decision”, Silva adds that the ruling “is a safeguard for an entire sector that supports wine culture around the world.”
“The delay in the American government’s resolution created uncertainty across markets and industries, and the cork sector was no exception,” he says. “Yet today, more than ever, cork continues to affirm itself as an irreplaceable partner to wine, preserving its authenticity, quality, and tradition.”
Domestic cork industry
The decision not to impose the 15% tariff on corks has much to do with the absence of a domestic cork industry in the United States.
Despite db breaking the news in 2023 that California was eyeing up its own domestic cork production, with the likes of E & J Gallo rumoured to be actively purchasing raw oak material, this is yet to get underway at any real scale.
“People are starting to think about growing cork in California because cork oak trees grow well there, but no one knows quite how to do it,” Bryan Avila who sits on the Napa Regional Conservation District board, told db.
As Silva emphasises, “there are no genuine local or international alternatives capable of replacing the natural cork closure. International recognition of the unique geographical origin of cork is key to the United States’ decision [to exclude cork from the export tariff], as this raw material is produced exclusively in the Mediterranean basin. This reinforces its strategic role in the American wine market.”
The US is the second-largest market for Portuguese cork after France, importing US$241 million worth in 2023, 70% of which was in the form of cork stoppers, according to the Natural Cork Council.
“For the cork industry to come together and made a collective effort to have conversations with government levels in both Europe and Washington, it’s obviously a positive result for everyone,” says Jochen Michalski, founder and president of Cork Supply, which was founded in the US in 1981. “The United States continues to be one of our strongest markets globally.”
Competitive prices
Speaking to db, Eric Feunteun, director general of Diam Bouchage, the world’s second-largest cork stopper producer, said he “warmly thanks the United States and the European Union—led by Portugal, France, and Spain—for reaching a trade agreement.”
Importantly, he explains, the deal, “which exempts cork from duties due to the unique Mediterranean origin of cork oak” will allow US winemakers “to continue safeguarding the quality of their wines at competitive prices.”
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Were the 15% tariff to have gone ahead for corks, then cork manufacturers would inevitably have been forced to raise their prices for US customers, pushing up the overall RRP of US-made wines. In states such as California, where prices are already ultra-premium, this may have negatively impacted sales.
However, Feunteun stressed that Diam and other cork businesses will still “face significant challenges under the remaining terms of the agreement, as our non-US customers will now be subject to a 15% duty on their wine exports to the United States.”
Last month a US appeals court ruled that Trump had no right to impose his sweeping tariffs on EU goods, however these are yet to be revoked.
Rosé business
With rosé being such big business in the US, are Provence producers jumping for joy over the tariff exemption? Perhaps not.
Stephen Cronk, co-founder of Maison Mirabeau tells db: “The natural cork exemption is clearly good news for cork producers in the EU and for those that import corks into the US. It also shows that strong lobbying has had an effect.”
However, Cronk adds, “for us European exporters of finished wine product, this will only have a very small impact if that part of the packaging is exempt. We will look further into whether it’s relevant to increase our production in cork, as opposed to screw cap, but there are clearly many other factors that come into play, like commerce partners and markets.
“Most importantly I still hope the EU will continue to make the case for wine and spirits to be exempt, or for the tariff rate to be reduced further. As has been commented by many transatlantic trade experts, the tariffs cause issues on both sides, and many jobs and budgets related to the US wine trade and hospitality depend on trade being as fluid as possible.”
Across the pond
David Parker, CEO of Benchmark Wine Group, a major player in fine and rare wines in the US, tells db that the exemption on tariffs on cork from Europe “is good news for wine producers in the upper part of the market, where cork is the standard (and often required) closure, as it will allow these to be produced without the extra expense that a tariff on cork would add. Despite their premium prices, many such producers are under market pressure, and any additional cost can be detrimental to their already-thin margins and tightening market segments.”
However, he adds, the exemption “represents at most a modest savings in overall cost for domestic wines, with only a limited positive effect for US retailers and distributors. US wine importers would likely see no appreciable initial benefit from this move.”
Most of all, Parker is hopeful that the ruling may pave the way to a more sizable development in trade relations.
“The fact that US–EU negotiations resulted in an exemption for cork—a unique agricultural product—provides hope that similar recognition might be extended to wines from the EU,” he says. “Such a move would have a far more significant impact, delivering meaningful relief to importers, retailers, distributors, and restaurants across the country. Ultimately, the survival of thousands of family businesses and tens of thousands of jobs may depend on progress in this area.”
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