Trump’s European Tariffs Could Be Devastating for the Portland Restaurant Industry

Portland, with two nearby wine regions and countless celebrated restaurants, is passionate about wine. It’s the foundation of a whole portion of the food and drink industry, from Champagne-specific wine bars to restaurants with booklet-sized wine lists. But with a new proposed tariff on European wine imports, that entire industry is facing a disruption of seismic proportions.

Portland’s restaurant industry is entwined with European wines. At the bustling bistro Le Pigeon, diners pair rosés from Bandol and syrah from Northern Rhône with their crispy pork shoulder and beef cheek bourguignon, while next door at Canard, servers chat with their customers about a sauvignon blanc from Loire to pair with the duck stack. Nights at Nostrana see bottles of Barbaresco and Barolo paired with pastas and seared steaks.

And then, of course, there are the stunning wine bars. At Dana Frank’s cozy Bar Norman, imbibers socialize over glasses of hard-to-find natural wines from rural France and Italy; Pairings, the eclectically decorated wine bar from the eccentric and gregarious wine steward Jeffrey Weissler, features whimsical but passionately curated flights that match wines to TV characters and astrological signs; and over at Ambonnay, the intimate, elegant house of Champagne, new owner Michael Knisley amiably educates wine geeks and neophytes alike about the bubbles in their glasses, examples of the famous wine region that aren’t available almost anywhere else in the state, at least by the glass pour.

But all of that could change, dramatically and not at all for the better, after Monday with the implementation of 100 percent tariffs on imports from the European Union. That includes all wines: those celebratory bottles of Champagne next to oyster towers, the weeknight bottle of tempranillo at the neighborhood tapas bar, those Alsatian rieslings beloved by wine geeks. The cause is an ongoing conflict between the United States and the European Union over subsidies granted to EU aerospace company Airbus. In short, the Trump administration sees the subsidies on Airbus as a leg up for Europe that the U.S. didn’t get, so the U.S. decided to heavily tax European products to even the playing field. Though the fight is entirely unrelated to wine, those retaliatory tariffs on European products will hit American bars, restaurants, and importers with potentially thousands of jobs lost, according to publications like Forbes, the Wall Street Journal, Fortune, and the New York Times.

The Tariffs, in Brief

In October 2019, the World Trade Organization finalized its decision that European subsidies to the company Airbus — a multinational, European aerospace corporation that manufactures airliners — were illegal, and that they had cost American aerospace business, specifically Boeing, billions of dollars over the last 15 years. The U.S. was granted the right to place tariffs of up to $7.5 billion annually on European goods in order to recoup those billions of dollars that Boeing lost in competition to the subsidized Airbus.

Almost immediately, the U.S. implemented a 25 percent tariff on numerous wines, spirits, and other agriculture goods coming in from European countries like France, Spain, Germany, and England. Though the tariffs excluded blended malts and sparkling wines, they hit the industry hard. According to retailers and distributors, many importers and distributors swallowed the cost themselves, not wanting to pass it on to the retail side of the industry.

Then, in early December, the U.S. Trade Representative (USTR) threatened two new tariffs. One was in response to France’s Digital Service Tax — a 100 percent tariff on Champagne, effectively doubling the price of importing Champagne. CNBC reports that the French taxes would be a “3 percent levy [that] applies to revenue from digital services earned by firms with more than $27.86 million in French revenue and $830 million worldwide.” This includes companies like Google, Facebook, and Amazon.

In addition, in early December the USTR threatened to extend its battle against Airbus by increasing the existing 25 percent tariffs to 100 percent and expanding the list to include essentially all wines from Europe, as well as cheeses, olives, and other sundries and goods. Those tariffs are paid for by American importers before they can receive these products and distribute them to U.S. businesses.

“Decimated” Wine Bars

The effects are simple to understand: With 100 percent tariffs, wine prices will double. What might have been a $12 glass of rosé at a favored wine bar or restaurant will be upward of $20, even more. The pricier bottles of wine, wine buyers and business owners say, will simply be too expensive to purchase. The places most affected by this will be wine bars and retail shops, where serving inexpensive, geeky European wine is a core part of the business model.

Champagne bar Ambonnay almost closed last year before it was purchased by Michael Knisley. Now, he’s thinking it might close once again, not even a year into his ownership. “I’m nervous, to say the least,” Knisley says. “If it happens and it gets reversed quickly, it’s something that maybe can be waited out. If it drags on for any amount of time, it really is as dire as everyone is saying.” Knisley’s wine program is almost entirely Champagne-based, and in his eyes, pivoting to American wines is just not realistic. “People come to Ambonnay for Champagne,” he says. “I can’t run a business on Oregon sparkling wine — most of it is done in such small quantities right now. It costs more than even some grower’s Champagne that is the foundation of my list. It’s not a like-for-like substitution. And it’s not what I do. What I know is Champagne.”

Dana Frank, the owner of SE Clinton natural wine haven Bar Norman, has similar concerns. “85 percent to 90 percent of our wine sales are European, and I sell pretty much all of our wines at $12 a glass because we want wine to be accessible,” she says. “If I have to see wine going to $18 or $20 a glass… who is going to come in and spend that kind of money on wine? [...] I would say that the heart and soul of the bar would be diminished.”

For people like Frank and Knisley, it’s not just about the rising price, and switching to a list of domestic wines isn’t an option. The owner of wine bar and shop Pairings, Jeffrey Weissler, worries the tariffs will impact the soul of his business. “It’s not sustainable; it’s ridiculous. I won’t be able to cover staff, there’s no chance,” Weissler predicts. “On a personal side, this is passionate people doing passionate business, and educating. France is the core of what we educate about; there is no story without French wine.”

At Shift Drinks, the downtown industry bar known for its all-hours “happy hour,” its esoteric $7 pours of wine might be a thing of the past. Co-owner Anthony Garcia, like many other wine buyers in town and throughout the country, has built relationships with wineries and distributors over the years that allow him to find the distinct wines he serves at a low cost. His concerns are echoed by others: that if the wine and spirits tariffs go into effect and stay there, or even if the 25 percent tariffs continue unabated for some time, many wines will be erased from the U.S. market.

“It’s not as though if the U.S. didn’t buy the wines, they wouldn’t have someone to buy them,” says Brian Martin, the import brand manager for Mitchell Wine Group, a local distributor and importer. He shares concerns that Garcia and others have: that once producers find new markets, there would be no incentive to return to the U.S., especially after the uncertainty raised by tariffs. “We would be cut off from wine that would never be back again. Some of it might get back, but the bulk of it never would.”

The Impact on Restaurants: “Terrifying for small business owners, [because] the margins are already so small”

While restaurants may not be as devastated as wine bars, they’ll certainly feel the tariffs. Andy Fortgang, the wine director and co-owner of the decadent French bistros Le Pigeon and Canard, expects the wine lists at both restaurants to shrink and costs to go up. Despite the fact that most of the restaurants’ revenues come from food, they’ll still take a financial hit. “It’ll affect our revenues and bottom line,” he says. “Most likely it would cost some jobs.”

Austin Bridges, wine director for Nostrana, shares those concerns. “Wine is 30 percent of our total sales every year,” he explains. “With [the tariffs at 100 percent], it would instantly eliminate the high-priced wines we work with. It would greatly shape the quality of wines that customers would be able to enjoy and that we would be able to offer by the glass.” He also points out that the cheeses, olive oils, and even the canned tomatoes the restaurant uses in its famous tomato butter sauce would be taxed at that rate.

Amanda Cannon, the wine director and co-owner of Normandie, the coastal-France minded bistro on Southeast Ankeny, has more than just wine to think about: The Calvados and brandy-based cocktails that define the bar’s identity and its connection to its namesake, Normandy, are also threatened by the tariff. “To have not just wine but spirits and cheeses have a 100 percent tax would impact us in a hugely negative way,” she says. “The most frustrating thing is that we try to make it affordable so that you might try a wine or spirit you haven’t tried before. If the $10 glass of wine is now $20, it means people can’t try these new things. It’s terrifying for small-business owners, [because] the margins are already so small.”

What about Oregon Wines and Foods?

A common suggestion that restaurant owners have heard lately is to pivot to a greater focus on domestic wines. After all, Oregon wines are definitely a source of pride, and often make their way onto restaurant and bar menus. However, Oregon wineries rely on small, independent companies to handle their distribution. Few of those distributors primarily work with local wines; most rely heavily on European imports for their business. “The distribution chain is going to be threatened,” says Scott Frank, owner and winemaker for Bow & Arrow Wines. “It’s an ecosystem, and European wines are a keystone species. For most of our distributors, retail shops that carry our wine, and restaurants that do... European wine is the centerpiece that keeps the lights on. Domestic is not the core of anybody’s book. It’s a small category.”

In a letter written to congressman and chairman of the House Ways and Means Trade Subcommittee Earl Blumenauer, winemaker and proprietor of Oregon’s Eyrie Vineyards Jason Lett presents an impassioned argument against the tariff — despite the fact that he’d theoretically benefit from it:

In the United States’ highly-regulated domestic wine market, we depend on healthy distribution networks in order to sell our products legally, state by state. Our financial survival depends on our distributors’ ability to sell a wide range of wines in addition to our own. Curtailing the ability of distributors to sell a broad portfolio of wines cripples their business, impacts the financial health of the greater hospitality industry, and limits consumer choice.

Though wine bars prioritize European bottles, they sell local wines as well. A lack of European wines would likely drive many out of business because they couldn’t sell the wines that are produced locally, and the same goes for retail stores and wine shops. “Imagine if you operated a record store,” Scott Frank says. “Suddenly they banned all genres of music except country music. You might think it’s a boon to country music, but all of those record stores would go out of business. No one goes there to buy just the one category; it needs to be supported by all the genres that the public is demanding.”

There’s also a matter of numbers — there simply isn’t enough domestic wine to fill the hole left if European wine prices doubled. The United States makes quite a bit of wine — 800 million gallons in 2016 — but it’s still dwarfed by Europe: Italy, France, and Spain, which together make up more than half of the world’s wine market. “You run into supply and demand issues when everyone is looking into new avenues all at once,” says Bridges.

The Fallout

Unfortunately, these tariffs are not meant to bolster local products — their intention, as stated by the executive branch, is to punish European nations for providing subsidies to an aerospace company. But according to an almost endless series of outlets, the effects could be devastating to the wine world, and to working-class jobs.

“The jobs, the thousands and thousands of people employed by the warehouses, truckers... working-class jobs that support this multibillion-dollar industry,” says Scott Frank. “All of them will be adversely affected by this.”

Because of this, Portland industry workers have spent the last few weeks organizing and speaking out, including meeting U.S. Sen. Ron Wyden of Oregon’s office and with Rep. Blumenauer. “We’re trying to be really open with what’s going on,” says Dana Frank. “Not to be alarmist, but to be realistic about how serious this is. It’s not just your Monday-night bottle of wine; it will have a profound impact on the whole industry.”

“I don’t want it to come across as the tiny Champagne bar with two part-time employees is some significant casualty in all this,” says Knisley. “The bigger story is the wide-ranging effect this has on people whose total livelihood is in true jeopardy here.”

The Office of Trade Representative has its comment section open until the end of the day today, January 13, for people to comment with their concerns. After that, the tariffs could be implemented at any point. This is a developing story and will be updated with further information.

“At the end of the day, put the politics aside. This will impact everyone, no matter what your politics are,” says Cannon. “Potentially in a huge way.”

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Le Pigeon

738 East Burnside Street, , OR 97214 (503) 546-8796 Visit Website

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Canard

734 East Burnside Street, , OR 97214 (971) 279-2356 Visit Website

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Bar Norman

2615 Southeast Clinton Street, , OR 97202 (971) 229-0290 Visit Website

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Pairings | Portland Wine Shop & Bar

455 Northeast 24th Avenue, , OR 97232 (541) 531-7653 Visit Website

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Ambonnay

107 SE Washington Street #167, Portland, OR 97214

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Shift Drinks

1200 Southwest Morrison Street, , OR 97205 (503) 922-3933 Visit Website