Wine producer Sam Parra grew up in California's wine industry and now owns PARRA Wine Co. in the Mid-Willamette Valley, Aug. 4, 2021 at Zenith Vineyard in West Salem, Ore. Samparra001
Lodi, California – California’s world-famous wine industry is bracing for a tough road ahead as escalating trade tensions between the U.S. and Europe threaten to shake up the market. Already struggling with shifting consumer trends, rising costs, and unpredictable weather, winemakers are now facing the potential impact of steep tariffs that could disrupt their business even further.
Governor Gavin Newsom’s home state produces roughly 80% of American wine, and the industry contributes billions to the economy. But a new wave of tariffs could send ripples through the supply chain, affecting everyone from farmers to distributors. The Wine Institute, which represents California wineries, has warned that increased costs for imported wine-making materials—such as barrels and glass bottles—could drive prices higher, while potential retaliatory tariffs from Europe could hit U.S. wine exports hard.
Still, some California winegrowers see a potential upside. Craig Ledbetter, a longtime winegrape grower and partner at Vino Farms in Lodi, believes tariffs could level the playing field against European competitors who receive substantial government subsidies. “It costs more to farm in California than in places like Chile or Australia,” he explained. “If tariffs help make California wine more competitive, that could be a good thing in the long run.”
Ledbetter remains cautiously optimistic, even though the industry’s challenges are piling up. Two years ago, he left thousands of tons of grapes unharvested due to weak demand and has since shifted some of his land to pistachios, a more lucrative crop. “As a farmer, I have to look at it through an optimistic lens,” he said. “If I don’t, what am I doing?”
While some see opportunity, many winemakers fear the tariffs could do more harm than good. The impact is already being felt in Canada, which imposed a 25% import tax on U.S. wine after the Trump administration slapped tariffs on Canadian goods. Canada is a major market for California wine, accounting for a third of exports in 2022. According to Jessie Vallery of Alexander Valley Winegrowers in Sonoma County, some Canadian retailers have already pulled U.S. wines from shelves.
The uncertainty is also weighing on efforts to promote California wines abroad. Stuart Spencer, executive director of the Lodi Winegrape Commission, recently returned from Europe, where tariff concerns dominated discussions with buyers. “It has created a lot of chaos and uncertainty,” he said. “European buyers are hesitant, and that’s leading to canceled sales.”
Despite the turbulence, some winemakers are staying focused on what they can control. Santa Barbara vineyard owner Keith Saarloos, who sells his wine directly to consumers, compared the current challenges to off-roading: unpredictable, bumpy, but full of possibility. “I hope something good comes from all of this,” he said. “I’d love for more people to start paying attention to new wines.”
California’s wine industry has survived wildfires, droughts, and shifting consumer habits. Whether it can weather a trade war remains to be seen.
