For a U.S. steel business and a Napa Valley winery, tariffs spell challenges

We can’t talk about the tariffs and how they’ve been felt in this economy without talking to some businesses who are dealing with them directly.

However, not all industries are experiencing the tariffs in the same way. The tariff on steel, for instance, sits at 50%, while wine has a 15% tariff with the E.U. specifically.

Todd Adams, president of Sanitube, a stainless-steel tubing supplier for food manufacturers, and Katie Lazar, general manager at Cain Vineyard & Winery in Napa Valley, joined “Marketplace” host, Kai Ryssdal to talk about how business has changed over the year. An edited transcript of their conversation is below.

Kai Ryssdal: Todd, let me start with you, and it's going to be the same question to the both of you: how’s your business today versus business, say, a year ago? How's it going?

Todd Adams: To be honest, business remains strong, and we're thankful for that. It is a lot more challenging these days. Pricing has been much more fluid than it has ever been in the past, particularly on the product that is imported. And, in our industry, a significant portion of the product is imported because there is no domestic manufacturing. We've had to increase prices, and it's largely been accepted by the market. Not sure how that's going to play out down the road, because eventually that will, you know, trickle down to the price of consumer goods and food products.

Ryssdal: Katie Lazar, same question.

Katie Lazar: It has been, just compared to a year ago, very complicated. Basically, on the international side, selling internationally, we have lost 100% of our our wine sales.

Ryssdal: I'm sorry, say that again. You've lost 100% of your international wine sales?

Lazar: That's correct.

Ryssdal: That seems challenging.

Lazar: It is. It is and on the domestic side, as most listeners and you would know, we are having a difficult year that has nothing to do with the tariffs, because there's a neo-prohibitionist movement around alcohol. So we're having to really work hard to make sure the fine wine that we make gets into people's glasses through the various channels that we have.

Ryssdal: Todd, the president has said he wants to rebuild American manufacturing, onshore American jobs. Do you think his tariffs are going to do that in a way that's going to help your company?

Adams: In our industry, the effect would be minimal. There is some opportunity for domestic manufacturing, and we, in fact, even before the president came into office, we took advantage of that. We do manufacture in Lakeland, Florida, but some of the more basic products are made overseas, and that's for a multitude of reasons, but I hope those jobs don't come back to the United States because they're not attractive in many ways.

Ryssdal: As I said up at the top, we've caught you in an airport. I imagine you're on your way to, I don't know, check out a supplier, go to a trade show, right? What's the conversation on the ground with folks?

Adams: Yeah, I'm actually headed to China today. I'm going to meet with old vendors and some potential new ones. I'm going to Asia, really. I'm looking at sourcing from some other countries, so I'm essentially going because some of our vendors have sort of grown tired of dealing with the United States and with American companies, and they're looking at diversifying elsewhere. So I'm going to reinforce the relationships that I took a long time building, and, you know, hopefully reassure them that we do still plan to work with them as much as possible.

Ryssdal: Katie, I imagine relationships are real important in wine. It's a very personal kind of product. How much of your time are you spending on building and or rebuilding or finding new relationships for your product?

Lazar: Oh, I have been solid on the road since August. Summertime for us is not a busy time. Our season basically is January through May, and then August through December. This is the classic time when 40% to 50% of our wine gets sold. Most of our wine goes out through the wholesale channel, selling to restaurants and retailers. And that means, you know, hosting wine dinners and meeting with buyers at restaurants, tasting them on the wine, and then moving on to another, doing eight to ten restaurants a day.

Ryssdal: So if you have another year like this year has been for you, where you've lost, as you said, 100% of your international distribution, are you going to stay in business?

Lazar: We're working very hard to, yes. We're doing OK. We've been around for 40 years. We're a very small, niche business, and we have people who love what we do, but we have to work all the time to make sure that we're creating enough revenue to support ourselves. We lost 80% of our vineyards and all of our buildings in the Glass Fire of 2020, so, while that is a disaster, we've been using this time to replant our vineyard and regrow our business. So that idea of a silver lining coming from something like that is the mantra that we live with today.

Ryssdal: Todd Adams, there's an analogy there, right? They took the crisis that was the fire and are trying to figure things out anew. You are taking these tariffs and resourcing your products and trying to find new supply chains. This is a permanent change for you, right? I mean, China is big and important, but you're diversifying.

Adams: We are. But, you know, I don't know what lies around the corner next. For example, we made a big push early on in this newly revamped trade war back in January, February, to source a little bit more from India, and then there was some tough talk on India that kind of came out of left field. So we try to keep multiple irons in the fire because we don't know where we need to turn next. And I think the truth of the matter is we need to work with China. We need to work with the world. Sure, we need to solve some issues there, but we're not going to, hopefully not going to just be an isolationist economy.