Trump's wine tariffs spark panic — but Virginia sees opportunity

The big picture: The wine industry went uncorked when Trump emptily threatened 200% tariffs on European imports, which some called a "financial death sentence" for many in the industry.

• But even with the current 10% tariff on foreign wines — and potentially raised fees after Trump's 90-day grace period — experts predict higher prices and narrower choices as winemakers pull out of the U.S.
• Plus, big-export domestic regions like California could be strained by retaliatory tariffs or bans from Canada, China and beyond.

State of play: "Uncertain" is the word du jour, especially since it's early. "Where we are in our industry is bated curiosity mixed with fear, and trying to figure out an opportunity," George Hodson, president of the Virginia Wineries Association, tells Axios.

• Hodson, who owns Veritas Vineyard & Winery in Afton, is spearheading a "tariff response team" among the state's 300-odd vineyards. He likens it to a "unifying moment" in the COVID pandemic, when wineries came together, shared information and got creative with sales.
• Their plan now: Push Virginia wine to distributors, restaurants and everyday sippers at a time when other regions are pulling back, unavailable or more expensive.

What they're saying: "In Sonoma, the whole restaurant industry and consumers are about Sonoma wine. We have yet to have that buy-in, and we're going to try and leverage the moment," says Hodson. "We want to get people to see Virginia wine country as their wine country."

Zoom in: The group is in the process of creating resources and events — everything from cards diners can leave at restaurants asking for Virginia wines to trade tastings, like one coming to D.C. next month with 30 producers.

• Hodson says they're targeting distributors and restaurants looking for substitutes for European bottles, noting his region's evolution and progress. "Some people checked in 15 years ago and haven't checked back."

The intrigue: Virginia is known for Bordeaux-style grapes, thanks in part to its parallel climate and oenophile Thomas Jefferson, an early cultivator who planted vines at Monticello and staked out Virginia as "the birthplace of American wine."

• "We're much more French than California," says Hodson, "more Old World than New World. We're a more relevant substitution for a Burgundian red than a Napa cab."

Reality check: Sliding into France's seat isn't that easy. Virginia winemakers worry tariffs will raise their production costs, and Virginia's problem is that the wine has always been expensive. Especially compared to places where viticulture is government-subsidized, like Argentina (hence your $10 Malbecs).

• Land here is pricey and not overly abundant, plus the weather is finicky, so farming costs are higher to grow and protect grapes.
• "I can't tell you how many times I bring my rosé to a D.C. restaurant, and they're looking for a $6 to $7 bottle. You can't even get that by the glass in the United States," says Kirk Wiles, CEO of Paradise Springs Winery, a bicoastal operation in Clifton, Virginia, and Santa Barbara, California.

Between the vines: Wiles says the hands-on approach of Virginia wineries — no mechanical harvesting — leads to higher quality but also higher prices. And that's made the wholesale and restaurant business tough, especially when the market is flooded with cheap imports that line distributors' pockets.

• "We need more distributors to believe in Virginia wine so we can get to that next level," Wiles tells Axios. He says visitors to his California winery will taste his Virginia wine and love it but then can't find it.
• "As that bottom shelf starts to come up, Virginia wine looks more attractive."

The other side: Not all winemakers are optimistic. Jim Law of Linden Vineyards, often called "the godfather" of Virginia wine, tells Axios: "We're going to have to hunker down. The key here is the uncertainty — nobody knows the impact, including the man who's making it all happen."

• Law says three crucial production elements could be impacted by tariffs: custom French oak barrels, European-made corks — derived from trees that don't grow in the U.S. — and Chilean glass bottles, which are both "environmentally friendly and stylish."
• Each element is meticulously sourced in the art of Law's winemaking, and either won't or can't be substituted.
• "We just don't know what the final invoices will look like," says Law.

Like other Virginia winemakers, Law is well-stocked and heading into bottling season. Price hikes won't impact this round. But he sees no cause to celebrate in the tight-knit ecosystem of winemaking.

• "How can I take advantage of someone else's unfair hard luck?" Law tells Axios. "I don't know if it'll make much difference in terms of increasing our sales, but if it does, it doesn't feel right."