Terry Brandborg will tell you that running his Brandbord Vineyard & Winery in Elkton is difficult enough without having to worry about the threat of a trade war with European wine producers.
But that is exactly what has happened as Brandborg and others in the wine industry locally and throughout the nation are anxiously watching to see if the Trump administration imposes a 100% tariff on European wines, as has been threatened. They fear that such a tariff, and potential trade war it might set off, will have a dire impact on their businesses.
“The wine industry is already suffering from a slowdown in growth as younger generations are embracing other beverages and there is an oversupply issue facing the whole industry, from growers, to producers, to importers and distributors, and all who benefit from the supply chains,” Brandborg said. “The proposed tariffs are a major and unnecessary disruption to an industry that has increasingly contributed to economic prosperity in Oregon and Douglas County.”
The looming trade war dates back to October, when the Office of the United States Trade Representative implemented a 25% tariff on a variety of goods from a handful of European countries, including France, in response to European Union subsidies to the aerospace corporation Airbus. Wines from the targeted countries that were below 14% alcohol and non-sparkling, were hit with the 25% tariff.
Last month the USTR proposed raising the tariff to 100% and applying it to nearly all European wines as a response to a tax France imposed on American companies like Amazon, Facebook and Google. That’s bad news for those who enjoy such wines, which could quickly double in price if such a tariff was put in place. Some stores, as well as restaurants, may stop selling European wines at all.
“This is a no-win proposition,” Jana McKamey, executive director of the Oregon Winegrowers Association, told The Astorian. “It creates chaos in the marketplace and reinforces hostile trading in the global ecosystem. Wine should not be used as a retaliatory pawn to unrelated industries.”
Wineries here and throughout the country also worry that a stiff tariff on European wines could result in them losing their distributors.
Very few wineries in Oregon have the time, resources and labor to sell the bulk of their wines directly to consumers. For most of those sales, they rely on distributors in other states to sell their wines in stores and restaurants. A 100% tariff on European wines could put many distributors out of business, which would have a ripple effect industry-wide, Brandborg and others say.
“Though many of the wineries here in Umpqua are small family producers and do not distribute, there is a very real potential that the impact would be felt across all wine producers,” Brandborg said. “I have not spoken with anyone that thinks limiting choice by putting these folks out of business will drive purchasers to domestic wines.”
Then there is the concern that the U.S. tariffs could turn into a full-blown trade war. Various U.S. wine industry groups have spoken out against the tariffs, arguing that the E.U. could just as easily turn around and target U.S. wines.
Brandborg echoes those concerns.
“Douglas County is small, but certainly not immune to the negative market forces that all predict will accompany these punitive tariffs, that really have nothing to do with any protections for US wine producers and all involved in this segment of the beverage industry,” he said.
Wine industry leaders throughout the region are making their case to lawmakers through phone calls, petitions, in-person visits and official comments.
McKamey, from the Oregon Winegrowers Association, said she encourages those in the wine industry, and just wine lovers in general, to reach out to their congressional representatives.
“It takes a lot of time and effort to develop international relationships in the wine industry,” said McKamey. “It can all disintegrate in days with these trade issues.”