A Historic Setting with Modern Challenges
High on the hill in the village of Peñafiel stands an imposing 10th-century castle. Red squirrels dart among its parapets, while in the fields below, a modern building contrasts sharply with the historic surroundings. This is the home of Protos, a prestigious winery located near Valladolid in the Ribera del Duero region of northern Spain.
The winery has been in operation since 1927, but it now resides in a vast, undulating structure that resembles the barrels it fills. Most of its exports go to the UK and the US, but recent developments may change this dynamic.
The Impact of New Tariffs
Spain is now under the EU’s trade deal with the US, which imposes a baseline tariff of 15% on all EU exports. This agreement came into effect recently. Spanish Prime Minister Pedro Sánchez expressed limited enthusiasm for the deal, while the government warned that industries like wine and olive oil could face increased risks due to high export volumes to the US.
Protos, known for its Crianza, Tinto Fino, and Gran Reserva wines, has already sent a significant amount of its products to the US. In anticipation of potential tariffs, many Spanish wineries, including Protos, took precautionary measures by sending extra bottles to the country after Trump’s election. Protos has enough stock in the US to last six months.
However, CEO Carlos Villar Bada acknowledges that this is only a temporary solution. “The only positive is that a period of uncertainty has ended. It is much better to know what the rules of the game are,” he said.
Market Shifts and Financial Implications
The US is the second-largest export market for Protos, following Mexico, and the second-largest for Rioja wineries after the UK. However, the new 15% tariff poses challenges for the industry. Spanish black olive exporters have already seen their market share in the US drop from 49% in 2017 to 19% in 2024 due to previous tariffs imposed during Trump’s first presidency.
While the uncertainty has been somewhat resolved, wineries must now calculate the financial impact. “The tariffs of 15% will complicate the situation a lot,” said Villar Bada. “The euro has risen in comparison to the dollar, and now we have these tariffs of 15% and a rise of 15% in the exchange tax.”
Price Adjustments and Industry Concerns
After Trump signed the executive order implementing the tariffs, a Protos spokesperson noted that the price of its flagship Tinto Fino wine would increase from $12 to $20 in the US. This shift could push the wine beyond the fair price range for consumers.
Despite the challenges, the deal offers some relief. Earlier this year, Trump proposed enforcing tariffs of up to 200% on European wine, Champagne, and spirits if the EU imposed a 50% tariff on American whisky. Winemakers and importers warned that such high tariffs could shut down the European wine business in the US. Villar Bada had previously stated that his company would stop trading in the US if 200% tariffs were imposed.
Mixed Reactions from the Wine Industry
José Luís Lapuente, director general of Rioja DO, described the 15% tariff deal as leaving a “bittersweet taste.” He acknowledged the benefits of having clear rules after prolonged uncertainty. “For Rioja, the United States is a very important market. This brings to an end the uncertainty. So to have the rules of the game fixed is something positive,” he said.
However, he also highlighted the negative consequences. “The negative side is that we now have tariffs imposed which means that we will either have to increase the price or cut margins for us.”
Preparing for the Future
Back in the village of Peñafiel, where hundreds of barrels rest in vast cellars, Villar Bada is already planning for Protos’s future in the US. “We are going to have to work with much less profit margin for ourselves and our importers and we will have to raise prices,” he said after the deal was struck.
“We will see how that is received by Americans.”
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