You might expect American winemakers to be popping bottles of California sparkling wine these days. With President Trump's tariffs on the European Union, U.S.-made wine now has a greater price advantage over Italian Prosecco and French Champagne.
This is a classic case that protectionists make for tariffs: they help domestic producers.
But the American winemakers we spoke with are more sour than bubbly about Trump's tariffs.
"To me, it's awful. There's no upside," said Adolfo Hernandez, owner and winemaker at Monroy Wines in Sonoma County, Calif.
So, why aren't tariffs a big win for American winemakers? We spoke to a bunch of them around the United States, and what they told us challenges the assumption that tariffs will help domestic industries.
How tariffs damage the wine supply chain
American winemakers' primary fear is this: The costs of all the things they need to make wine — in econspeak, the intermediate goods — will go up.
Many of the things that winemakers regularly buy often come from abroad. Three notable examples: glass bottles, corks and barrels (which are used to age wine and refine its flavor).
Portugal exports almost 60% of the world's cork, followed by Spain, which makes almost 20%, according to a cork business industry report. The bulk of the world's supply comes from cork oak trees in southwestern Europe and northwestern Africa.
And, sure, winemakers could pivot and seal their wine bottles with screw-off tops. But those are often made of aluminum, some of which will also be subject to Trump's tariffs. Plus, cork allows in oxygen, which is needed for some wines.
Barrels pose another problem. For winemakers, a gold standard is French oak barrels; these can run about $1,000 each or more, depending on size.
"Not having French oak will drastically change the flavor profile of many wines," said Hernandez, of Monroy Wines. In fact, American oak barrels have such a different flavor profile that they're often used for bourbon. With tariffs on oak barrels (alongside other products from the EU), "they could be really, really unaffordable for a lot of small producers," Hernandez said. And even if winemakers did switch to using American oak, the process could take years.
Then there are the bottles. Many glass bottles are made in China; Chinese imports are now going to be subject to a 145% tariff.
"We get our bottles from China, and they're gonna be increased in terms of tariffs," said Ken Freeman of Freeman Vineyard & Winery in Sonoma County. "Our costs are gonna go up."
Others get their glass bottles from Mexico. Like other goods from Mexico, these could be subject to a 25% tariff. Depending on how that tariff plays out, "that is going to have a huge impact on us," said Scott Donnini, owner of Auburn Road Vineyards in New Jersey and vice chair of the Garden State Wine Growers Association.
For Madson Wines in the Santa Cruz Mountains, the prices of barrels, bottles and corks made up roughly 30% of its total costs before the tariffs, founder Cole Thomas said.
"The wine industry operates on small margins already," said Thomas. If those prices go up, "we will have to increase the price of our wine to reflect that, which is frankly not something we would like to do."
OK, but can't winemakers just raise their prices?
In theory, the tariffs will make imported wine even more expensive, leaving room for domestic wineries to raise their prices and stay competitive.
But that doesn't mean more people will drink domestic wine, because the substitute for more expensive wine isn't just cheaper wine. It's also beer, cider, hard seltzer, THC or not drinking at all. Americans have been drinking less alcohol in recent years — especially younger Americans. Wine consumption in the U.S. and globally shrank last year, according to a report from Silicon Valley Bank.
American winemakers are already worried that if they raise their prices too much, consumers will say, meh, and forgo a bottle of cabernet sauvignon — especially if the economy enters a recession.
"There does come a point where you price yourself out of the market," said Jordan Harris of Heron Hill Winery in New York state. "So we would be cautious on raising our prices, but certainly, I mean, if we can't produce within the price range that we are in, then we would have to raise our prices. There wouldn't really be a choice."
A chilling effect for distributors
In addition to supply chain challenges, American winemakers are also worried about the final step in a wine bottle's journey: distributors.
Many American wineries — both large and small — rely on distributors to get their products into customers' glasses.
A federal regulation that is almost a century old creates what the alcohol industry calls the "three-tier system" (the three tiers being the alcohol makers, the wholesalers and the retailers). This system dates back to the end of Prohibition. And it means that the people making alcohol have been prohibited from selling directly to consumers across state lines; the alcohol needs to go through a middleman — a distributor.
"It's a way of, perhaps for historical reasons, of creating an extra check in the system, such that alcohol is managed properly, because there's lots of problems associated with alcohol," said Bradley Rickard, a professor of applied economics and management at Cornell University and a co-editor of the Journal of Wine Economics.
While states are increasingly allowing winemakers to sell directly to consumers, in practice lots of wineries of all sizes rely on distributors to sell their wine to wine stores, bars and restaurants across state lines.
That's especially the case for the biggest wine sellers in the United States. "Like for mass wines where you have thousands of cases of, you cannot ship them straight," said Karl Storchmann, an economics professor at New York University and a co-editor at the Journal of Wine Economics. "You have to be in stores and so forth."
The point is: American winemakers largely rely on distributors to sell their wine around the country. But those distributors aren't just selling wine from the United States. Many rely on importing and selling wine from other countries, especially from Europe. Last year, Americans imported nearly $6 billion of wine from the EU, especially from France, Italy and Spain.
American winemakers fear that tariffs will strain those same distributors that they rely on.
This fear was even greater last month, when Trump threatened a 200% tariff on European wine imports. Trump did not end up imposing that tariff.
Instead, on April 2, he proposed a 20% tariff on European imports. Last week, he announced a 90-day reprieve and lowered EU tariffs to 10% for the time being. They could still go back up to 20% after the 90-day period. In the meantime, U.S. winemakers are concerned that the ultimate tariff numbers, as well as the uncertainty, could threaten their distributors and, in turn, hurt their own ability in the short term to distribute wine.
Theoretically, those businesses could of course sell American wines instead. Billy Weiss, owner of North Berkeley Imports, has been getting cold-emailed by American winemakers, asking him whether he's looking for new American clients. "I emailed one of them back. I was like, that's really good timing — I like the initiative," he said.
While it's possible he could reorient his business around supporting domestic winemakers, "we need 50 to 60 domestic producers to help make up the loss for what's going on with the European turf. So it's a daunting task," and it would take time, Weiss added.
Lingering uncertainty
Will American winemakers win with tariffs? The ones we spoke with don't seem to think so.
A California wine advocacy group, the Wine Institute, said in a statement, "These tariffs will only hurt the broader wine sector including farmers, vintners, distributors, retailers and the millions of people working across the extended wine supply chain."
It's possible, of course, that things will play out differently — that tariffs will wind up helping some American winemakers sell more bottles. It's also possible that American winemakers will sell more bottles, but at a cost to their own margins.
Canada, the U.K. and China have imported the most U.S. wine in recent years. But China now has an additional 125% tariff on American goods. And there have been reports of Canadians taking American alcohol off store shelves.
If the market in the U.S. floods with domestic wines, that would make it "very hard to increase prices on wines that were made here," said Storchmann, the NYU economics professor. " Is it good for consumers? Probably for consumers of U.S. wine, which is a specific style of wine. Is that a good thing for wine producers? No."
In any case, the dizzying uncertainty over the past month has already been disruptive.
When Trump first threatened a 200% tariff on European wine imports in March, distributor Kate Laughlin, CEO of Martine's Wines, paused new wine purchases; importing seemed too cost prohibitive for European winemakers and American consumers.
Laughlin resumed placing orders after April 2, once she saw the 200% tariff wasn't taking effect. Still, she remains cautious.
"Depending on how the next few weeks go, we anticipate the tariff scenario for us could even get worse before it gets better," Laughlin said. "Each decision right now still feels like a bit of a high-stakes gamble. The scenario remains very difficult to navigate, demoralizing, and anxiety remains high."
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