Recently, President Trump’s intensive release of tariff policies has stirred up a huge wave of controversy, but some individuals in California’s wine industry hold an optimistic attitude towards the tariffs.
Stuart Spencer, a winemaker and executive director of the Lodi Winegrape Commission in California’s Central Valley, is one of those individuals. He mentioned that amidst the recent media reports focusing on restaurants and retailers relying on imported wines, the voices of domestic grape growers and winemakers have been overlooked.
Spencer stated: “For California grape growers, I believe they would view tariffs as supportive, necessary measures that can help rebuild a fair competitive environment. Currently, they are not operating under fair competition conditions.”
In recent years, due to declining global demand and a flood of cheap, subsidized imports, the California wine industry has been severely affected. Many farmers have been forced to abandon large vineyards, allowing fruits to wither on the vines. Since the outbreak of the pandemic, small to medium-sized family farms producing around two-thirds of California’s grapes in the Central Valley have been hit particularly hard.
Jeff Bitter, a fourth-generation grape farmer and president of the Allied Grape Growers organization based in Fresno, expressed that grape farmers and winemakers are already weary of the notion that Trump’s tariffs are detrimental.
He stated that in the wine industry, tariffs are not universally negative. For California grape growers and winemakers who do not rely on imported materials, tariffs might actually be beneficial.
While recent reports on the California wine industry have mostly focused on Trump’s threats to impose 200% tariffs on EU wines, champagne, and alcoholic products, on April 9, the Trump administration announced a 90-day suspension of retaliatory tariffs on most trading partners. Simultaneously, the US imposed a 10% basic tariff on all global imports except from China. Trump mentioned that tariffs on China would escalate to 125%, marking the latest salvo in the escalating trade war.
Spencer pointed out that following the trade war, California wine export orders might pause, but imports will also be impacted. He highlighted feedback from numerous wineries reporting increased domestic orders. He mentioned that his own St. Amant winery has seen a noticeable increase in orders recently.
According to Spencer, 80% of California’s wine comes from small independent family farms, which struggle to compete with the heavily subsidized EU wine industry. This creates an extremely unfair competition, flooding the market with supplies that should naturally be weeded out.
California businesses also face disadvantages in the domestic market, as they have to compete with a plethora of cheap imported wines. These wines are often imported, blended, distributed, and retailed by the same group of people who also sell local Californian wines – benefiting from federal loopholes in subsidy schemes.
Spencer emphasized: “This has profound effects on the agricultural community in the Central Valley. You can see thousands of acres of vineyards left unpruned and unharvested last fall, while a new season is about to begin. These grapevines may be uprooted or simply left abandoned.”
He further mentioned that California businesses endure high production costs and strict regulations. Bitter added that California’s grape and wine production costs are among the highest globally. This is due to regulatory standards including environmental compliance, wages and hours, and employee treatment, which they abide by.
While grape farmers may view the tariff policy optimistically, not everyone is willing to openly support it. Spencer noted: “Many people refrain from speaking out because it has become a highly politicized issue. Half of the population opposes it solely because they dislike Trump, regardless of the rationality of the tariff policy itself.”
Bitter added that another concern is not wanting to offend large liquor distributors dominating the market, who both purchase local Californian grapes and import wines in large quantities.
For California businesses enduring the hardships of a subdued global wine market, they express facing numerous market distortions and trade barriers, leaving competitors with significant advantages. While tariffs cannot solve all problems, they offer a glimmer of hope after years of negative news.
Spencer suggested that American restaurants and retailers entirely reliant on imported products could consider purchasing Californian or other American domestic wine brands. He remarked: “This upheaval will have winners and losers. For California grape growers, this could be a victory.”