What does Trump 2.0 mean for wine investors?

How may Donald Trump’s return to the White House influence wine investment in 2025?

President Trump’s return to the world stage and the Oval Office has ramifications across the globe, and in all markets.  Already anticipated, is the potential for increased tariffs on wines exported to the US, which could impact important US demand in the secondary market. Changes in currency dynamics and monetary policy managing inflation also have the potential to both boost and suppress trade across the Atlantic.

The significance of US demand for fine wine

US buyers have risen to prominence in the fine wine market and in 2024 accounted for 35.5% of the total purchase value on Liv-ex. Last year was the first where the US became the leading territory in terms of greatest trade share on the exchange. Significantly this buying power was completed by just 10% of the participants involved.

The year ended on a rising note with US buyers responsible for 42.6% of purchases in December 2024. This is a jump up on 2023 where the US was in line with UK and Euro trade levels.

The market-low prices and a stronger dollar contributed to the rise in demand in H2 2024. Trump’s re-election in November and his very clear messages on tariffs are likely factors boosting trade as the year closed.

US Buyers Top Traded Wines in 2024

Source: Liv-ex Power 100 Report 2024

An insight to the potential impact of an increase in US tariffs in 2025 is to look back at Trump’s previous rise in levy. President Trump first time round imposed tariffs of 25% on European still wines excluding Italian and sparkling wine imported into the US. The result was a reduction in US purchase value on Liv-ex from 76.5% in 2019 to 57% in 2020. Buying shifted to exempt Italian wines and key Tuscan labels saw demand rise by a third in that period.

There isn't the same volume of alternative US domestic wines to the Euro fine wines except for a few Napa icons and this supports a level of demand. The fact that fine wine is more expensive in the US and merchants have more headroom in their margins provides some potential buffer. An anticipated strengthening US dollar may also help soften any tariff burden.

Trump's impact on currency and fine wine

The commencement of the era of Trump 2.0 could see an impact on currency dynamics, inflation and interest rate changes around the world. In terms of currency, UK and US buyers could certainly benefit from a weakening Euro and US buyers have capitalised on a stronger US$ to Euro when buying fine wine in recent months. This could help mitigate against tariff increases for US buyers. There is an expectation that the US$ will continue to strengthen, however there is no certainty in this. A weaker US dollar would be a challenging factor combined with tariff increases for this important sector of trade.

Our view

Initial response to Trump’s return to power in financial markets has been positive. No doubt, his America First agenda is likely to mean that tariffs on fine wine exported into the US will be reviewed and increased. The previous period of higher US tariffs was prior to the Covid pandemic, and the market is now broader and with more participants, many attracted by the bull run in 2020 to 2022.

There could also be a potential boost for economic growth and consumer disposable income with expected reduction in interest rates in 2025. Cuts are not expected to be as deep nor to happen as quickly as first thought this year, but the OECD forecast rates in the UK to fall to 3.5% by 2026. The US Fed is expected to make two cuts from the current 4.48% level and Trump will want to see this happen.

2025 has started firmly as a ‘Buyer’s Market’ for wine investors and a strong opportunity to buy at the market low. The key benchmark Liv-ex 100 ended 2024 with a modest 0.2% rise indicating growing stability. We  believe Q1 2025 is a key period to start a fine wine portfolio and add value to an existing one.

For more information contact our expert team on 0203 384 2262.