Quick Take
Local wineries in Santa Cruz are grappling with the fallout from President Donald Trump's tariffs, which have led to canceled international orders and rising costs for materials. Winery owners argue that the tariffs will hurt smaller businesses and fail to boost domestic wine sales, further exacerbating the industry’s already dire struggles.
President Donald Trump insists that his sweeping tariffs will ultimately bolster the U.S. economy, but it will do far more harm than good on the wine industry, say Santa Cruz area wineries.
The negative impacts have already begun to be felt by local wineries. International orders to Canada, Europe and Asia have been canceled, and winery owners said they’re anxious about price increases of certain critical products like glass and labels, even if those items are made and purchased within the U.S.
As on Monday, all imported products, including foreign wines and materials like corks and wine glass, will face a minimum tariff of 10%. There are also 20% tariffs on wines from the European Union, and 30% tariffs on wines from South Africa. Wines from Australia, New Zealand, Chile and Argentina also have 10% tariffs.
The idea that these tariffs will support domestic wineries and increase national demand for American wines is false, said Richard Alfaro, owner of Alfaro Winery in Watsonville. “Absolutely not. It will just wreck the industry in general,” he said.
Alfaro has already lost international orders in response to the political climate. Until recently, his winery exported about 500 cases of wine annually to Norway and South Korea. But six weeks ago, customers in those countries cancelled their orders.
He doesn’t think domestic orders will be able to make up the gap for lost international business. “We will lose a lot more business than we will gain,” he said.
Bradley Brown, owner of Big Basin Vineyards in the Santa Cruz Mountains, is skeptical that higher prices will influence wine drinkers who buy European wines to start buying American substitutes. Those preferences run deeper than price, or even taste, and many people who collect European wines are already used to paying more. “Whether people will or won’t, it’s just going to drag the whole wine business down,” he said. “It’ll be another reason that people stop drinking wine.”
The wine industry is already reeling from a historic downturn. Globally, people, especially younger drinkers, are buying less wine and drinking less alcohol in general. This has led to a glut of excess wine in the market. On top of that, price increases that stretch back to the pandemic on materials like glass are impacting wineries’ bottom lines.
Tariffs will further increase the costs of vital winemaking materials like glass, capsules, corks and barrels. While some of these products are made domestically, American companies typically raise their prices to match price increases by international competitors. “It’s not just the 25% getting tacked on to products that are getting imported to the United States. Manufacturers here will increase their prices, too,” said Alfaro. “Local companies aren’t going to sell for 25% cheaper when they have the opportunity to make more.”
Brown also sees some countries taking a stand against tariffs and refusing to buy American wines. Big Basin was in the process of closing deals on exporting wine to the U.K. and Sweden, and those clients canceled their orders in response to tariff threats. “They don’t like the U.S. anymore. It’s gotten personal,” said Brown.
Alfaro Winery has managed to weather the decreased demand because of the 28-year-old brand’s reputation, and the business’s financial stability. But Alfaro worries about how tariff pressures will impact younger wineries – like Farm Cottage Wines, founded by his son, Ryan Alfaro – that may have debt, need to invest in equipment, or lack the brand familiarity of a longstanding winery.
“It’s more difficult for younger guys and gals that are new in the business, that are making beautiful wines but don’t have the impact of the brand that we’ve had for 30 years in this area,” he said.
Brown predicts that small, family-owned wineries will be the hardest hit when wine titans, who can command dozens or even hundreds of different labels, pressure their sellers to keep sales of their wines up. If the largest wine companies represent most of the wines that a restaurant, wine shop or distributor sells, those big brands don’t want to see sales dip too much – and can threaten to walk away with all of their titles if they do.
As a result, sellers would be influenced to sell those brands over any labels from a smaller winery in order to maintain that important relationship. “The little guys get squeezed. We don’t have any clout or leverage,” said Brown. “It happened during the 2008 financial crisis. They stopped buying the younger, smaller brands because the big brands were the 800-pound gorillas in the room, and they would get their way.”
Bargetto Winery in Soquel has yet to be directly affected by the tariffs. The 93-year-old winery doesn’t export wine anymore. While other wineries are feeling the effects of global slump, Bargetto’s sales grew in 2024 by expanding to new states like Idaho, Florida and Virginia.
While Bargetto Winery could theoretically benefit from increased domestic demand, co-owner John Bargetto doesn’t think the ends justify the means. “I don’t vote for people who just benefit my business. I like to think about what is best for the world and for the country,” he said.
