US, Canada, EU tariff war impacts red swing states and Washington alcohol

Washington wineries and grape growers, already facing the effects of the latest round of tariffs from Canada, are now bracing for more impact if the European Union (EU) pulls the trigger on more tariffs on products like corks and oak barrels, which could also have a significant impact on Washington distilleries and other related industries.

Canada is Washington’s largest export market for Washington wines, including a little more than 132,000 cases of wine shipped across the border last year. Canada’s new 25% tariff on agricultural products, including wine, will increase the cost of U.S.-made wines for consumers in Canada.

Now, the EU is considering tariffs on other products that wineries and distilleries across the state rely on, including cork imported from Portugal and oak barrels from France, Hungary, and other EU countries. There’s also glass imported from China that could be impacted by tariffs.

Vineyards and grape growers could suffer the most, experiencing the cost squeeze from exports and imports to and from the U.S., Canada, EU, and China.

“We market and distribute our wines across 72 countries with Canada as our largest export market, followed by the UK, the Nordic countries, Japan, South Korea, so obviously we are watching this very closely,” Christina Kelly, Executive Director of the Washington State Wine Commission, said. “We’ve been working for a long time to develop good relationships, good partnerships, and to be able to distribute our wines throughout the various provinces in Canada, so the tariffs come at a time where we’ve invested heavily within the Canadian wine market.”

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Canada and EU target Republican-leaning and swing states

Meanwhile, Canada and the EU are continuing their retaliatory tariffs on U.S. goods, with a focus on products from states that typically support Republicans, as well as swing states.

On Wednesday, the EU announced tariffs on $28 billion of U.S. imports, including whiskey, beef, metals, and other products. Canada also unveiled its own set of levies on more than $20 billion of U.S. imports, many of which are designed to target goods produced in key states.

Canada’s tariffs focus on items like peanut butter from Georgia, Alabama, and North Carolina, orange juice from Florida, whiskey and bourbon from Kentucky and Tennessee, and Harley-Davidson motorcycles from Wisconsin. These states tend to vote Republican, and their industries are now facing the brunt of tariffs.

“We focus on Republican states and their products because we know who is doing this to us. We know who is enabling the president to attack us,” British Columbia Premier David Eby said in a recent speech. “So, we’re sending a message to those allies of the president. We see you. Stand up for your constituents, and then we can all move on to a better place of being able to try and reestablish some sense of normalcy in our relationship at the political level.”

The announcement of the tariffs immediately impacted stocks. Harley-Davidson saw a 6.4% drop, closing at $24.29 on Wednesday, while Kentucky-based Brown-Forman, maker of Jack Daniel’s whiskey, saw its shares fall by 6.9%, closing at $33.54.

In response to these new tariffs, President Trump has promised to retaliate, including a 200% tariff on alcohol imports from the EU if they continue targeting American alcohol products.

More on MyNorthwest: Trump raises tariffs against Canada, Mexico with trade war looming

Broken relationships?

Kelly worries about the impact the tariffs could have on the ongoing relationship between wineries on either side of the border. In recent years, the Washington State Wine Commission has cultivated relationships with counterparts across Canada, including distributors who have helped move Washington wines into new markets across every province.

The relationship hit a high last harvest when frost and freeze destroyed grape vines across British Columbia, resulting in losses between 97-99% of typical grape production. Washington vineyards and wineries sold part of their own grape crop to B.C. wineries to help save their industry. A tariff war could threaten to erode that good faith.

“Up until this time, B.C. and Washington had a wonderful working relationship, particularly when it came to us providing grapes when they had a downturn and a loss of crop,” Kelly said. “What does it do to all the work that we focused on over the last year? The relationships? The consumer confidence?”

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