ELGIN, Ariz. – As trade tensions between the United States and the European Union continue to evolve, Arizona’s wine and spirits industry is bracing for potential fallout—though local producers say broader market forces remain the more pressing concern.
In March, President Donald Trump threatened to impose a 200% tariff on European wine and spirits following the EU’s proposal to place a 50% tariff on American whiskey. The situation escalated further this week when the EU approved retaliatory tariffs ranging from 10% to 25%. However, those measures were paused after Trump announced a 90-day delay on most of the proposed tariffs.
While the fluctuating policies have yet to directly affect local wineries, Arizona producers are closely monitoring the situation, particularly in regard to imported supplies such as barrels and corks.
“We use European oak—French, in particular—because of the flavor and style it brings to our wine,” said Kent Callaghan, owner and winemaker at Callaghan Vineyards in Elgin. “I used to use only American oak, but there is a noticeable difference.”
Callaghan’s operation is largely self-contained within Arizona, with 85% of its revenue generated through direct-to-consumer sales at the winery. Because of this, he said, international trade disputes may not have as immediate an impact compared to larger exporters.
Similarly, Mark Beres, co-founder and CEO of Flying Leap Vineyards & Distillery, said the bulk of his sales also remain in-state.
“Because we’re not exporting any of our wine, retaliatory tariffs on American goods crossing borders don’t directly affect us,” Beres said.
Although Beres has shifted many of his supply sources to domestic providers—including American oak for barrels—he acknowledged that tariffs could still influence the cost and availability of certain materials. Even so, he believes larger challenges loom over the industry.
“Inflation, oversupply, and changing demographics are much bigger issues right now,” Beres said.
One key shift, Beres explained, is a generational change in drinking habits. While alcohol consumption has traditionally increased with age, he noted that younger generations are increasingly choosing to abstain or pivot to alternatives like marijuana, which is now recreationally legal in Arizona.
“There’s a cultural shift happening that’s impacting the wine business,” he said. “You can almost set a generational clock to it.”
This broader trend is not limited to wine. Ken Phox, president of Tequila Corrido, an Arizona-based brand with warehouses in both the U.S. and Mexico, echoed similar concerns. His company is currently in a holding pattern, waiting to see if and how the tariffs will be implemented.
Yet even the anticipation of new tariffs has already triggered market reactions.
“In Texas, one of our distributors doubled their order just in case tariffs hit,” Phox said. “That impacts our planning across other states too. If they’re stockpiling, others might follow.”
For consumers, it remains uncertain whether tariffs would lead to noticeable price increases. Callaghan believes that local producers, particularly those who sell directly to consumers, are better positioned to absorb any added costs—at least for now.
“Our business model avoids middlemen, which gives us more flexibility,” he said. “But for new producers, this could become a serious burden.”
Beres added that the impact of tariffs on his business would largely depend on consumer behavior.
“If demand rises for American or local wines, we might see a bump,” he said. “If it drops, we’ll feel that too.”
Ultimately, Beres believes the industry’s current turbulence runs deeper than trade disputes.
“The turbulent sea that wineries are in right now predates the election and tariffs,” he said. “These issues are far more prescient for wineries today.”
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