Oregon’s wine industry is nervously waiting to see if the Trump Administration imposes a 100% tariff on European wines. While this shot across the European Union’s bow appears far removed from Oregon, local wine bar, restaurant, winery, and bottle shop owners fear it will have a devastating impact on their livelihoods.

In October 2019 the Office of the United States Trade Representative (USTR) implemented a 25% tariff on a variety of goods from France, Germany, Spain and the United Kingdom in response to European Union subsidies to multinational aerospace corporation Airbus. Wines from the targeted countries that were below 14% alcohol and non-sparkling were hit with the 25% tariff.

Two months later, the USTR proposed raising the tariff to 100% and applying it to nearly all European wines as a response to France’s 3% digital services tax on American companies such as Amazon, Facebook and Google. If this happens, the price of European wines could quickly double.

October’s 25% tariff offered a preview of what might be in store for local wine importers. Michael Wheeler of PDX Wines had 1,100 cases of European wine arrive just after the tariff was put in place. 700 of those cases were below 14% alcohol and subject to the 25% tariff. “We had to write a $10,000 check on the spot, on top of what we originally paid, to get all of our wines released,” Wheeler said.

Joshua Segal, owner of Prufrock Wines in Portland, currently has tens of thousands of dollars worth of Champagne and other European wines en route to Portland via cargo ship. If the 100% tariff is enacted while his wines are in transit, Segal will pay double when they arrive. “That would be a tsunami that would destroy our business,” Segal says

With a 100% tariff, importers who specialize in European wines will be faced with selling wines at double their original price. Your favorite $15 bottle of Spanish red could suddenly be $30 at your local bottle shop. Or they may just stop bringing in your favorite wines.

“Importers won’t bring in a $20 bottle of wine that they have to sell to their customers for $40, but they might go for the $6 European wines,” says Gregory Cantu, co-owner of Rhone Street Wine Co., an importer based in Portland.

Cantu says the 25% tariff and uncertainty over future tariffs have already caused him to start importing wines from South America.

“I was doing great business with Bordeaux wines and now those relationships are lost. The South American wines are nice, but I will not make as much money with them and they are no replacement for someone with a Bordeaux palate,” Cantu says.

Dana Frank, owner of Bar Norman, a wine bar and bottle shop located in Southeast Portland, is also concerned about the possibility of losing access to the European wines she currently sells: “These are styles of wine and grape varieties that can’t always be found in other parts of the world. And once the wineries in Europe begin selling to places like China instead of us, who knows if we will be able to rebuild those relationships.”

Fewer options could cause customers to take their business elsewhere, which is a problem for the retail stores who depend on European wines for a significant percentage of their sales. Asking lifelong fans of red Burgundy to accept a Chilean pinot noir instead would be like saying to a baseball fan “we’re banning MLB games, but don’t worry, you can always watch cricket.”

Even the uncertainty over tariffs is a problem. Laura Bartram of E&R Wine Shop in Portland reports some distributors aren’t placing orders until a decision is reached on tariffs.

“Customers will expect to not find the wines they have come to expect. This will impact our sales in the year to come, potentially crippling our business and others. Then if we aren’t around, who will sell the Oregon wine?” Bartram asks

Oregon wineries face another potential blow: losing their distributors in other states.

Very few wineries in Oregon have the necessary time, resources and labor to sell even a majority of their wines directly to consumers. For the bulk of their sales, they rely on distributors in other states to place their wines in retail stores and restaurants.

Jason Lett of The Eyrie Vineyards in McMinnville drove the point home in a recent letter to Congressman Earl Blumenauer: “Our financial survival depends on our distributors’ ability to sell a wide range of wines in addition to our own.”

John Paul, owner of Cameron Winery in Dundee, says “Cameron literally rides on the coattails of French wine sales. This is true of all my compatriot wineries in Oregon.” Paul’s prediction if the 100% tariff is levied? “I expect literally 100% of my distributors around the country to fold. It will devastate us like nothing seen since Prohibition.”

Are these predictions of doom warranted?

“The panic is justified. This is an existential threat for some wine businesses,” says Mike Veseth, author and emeritus professor of international political economy at the University of Puget Sound.

The USTR’s decision could come in six hours, six days or six weeks. In the meantime, the Oregon wine community plans for the worst while hoping for the best.

-- Michael Alberty writes about wine for The Oregonian/OregonLive. He can be reached at malberty0@gmail.com. To read more of his coverage, go to oregonlive.com/wine.

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