BBC: 'Is it for a day or four years?' Tariff uncertainty spooks small businesses

Donald Trump's talk of applying new tariffs to goods from America's biggest trade partners has sparked months of uncertainty for business owners.

On Saturday, the president made good on his threats, ordering a new 25% tax on shipments from Mexico and Canada and raising existing tariffs on goods from China by 10%.

But that has not stopped the questions.

"Is it for a day, is it a political flex or is it something that will last for four years?" asked Nicolas Palazzi, the founder of Brooklyn-based PM Spirits. He runs a 21-person business that imports and sells wine and spirits, about 20% of which come from Mexico.

Trump's orders set in motion threats that the president has discussed for months, striking at shipments from America's top three trade partners, which together account for more than 40% of the roughly $3tn goods the US imports each year.

Canadian oil and other "energy resources" will face a lower 10% rate. But otherwise, there will be no exceptions, the White House said.

Trump said the tariffs were intended to hold Canada and Mexico accountable for promises to address illegal immigration and drug trafficking.

The measures go into effect on 4 February and are to remain in place "until the crisis is alleviated," according to the orders.

If the plans were not a surprise, they still presented a potentially stunning blow to many businesses, especially for those in North America. The three countries have become tightly linked economically after decades of free trade under a treaty signed in the 1990s, known then as Nafta and updated and renamed under the Trump administration to USMCA.

The growth of mezcal in the US, brought in by businesses like Palazzi's, has been part of this shift.

Since 2003, consumption of tequila and mezcal has roughly tripled, increasing at a rate of more than 7% each year, according to Distilled Spirits Council, a trade group.

Overall since the 1990s, trade in spirits between the US and Mexico has surged by more than 4,000% percent, said the organisation, which issued a statement after the president's announcement warning that the tariffs would "significantly harm all three countries".

For months, Palazzi has been fielding nervous questions from his suppliers in Mexico, who are typically small, family owned businesses and may not survive if the tariffs are prolonged.

If it sticks, he said the 25% tax on the bottles of mezcal, tequila and rum he brings in will push up prices - and sales will drop.

"Definitely this is going to impact the business negatively. But can you really plan? No," he said. "Our strategy is roll-with-the-punches, wait and see and adapt to whatever craziness is going to unfold."

Economists say the hit from the tariffs could push the economies of Mexico and Canada into recession.

Ahead of the announcement, Dan Kelly, president of the Canadian Federation of Independent Businesses, described the looming tariffs from the US, and expected retaliation, as "existential" for many of his members.

"Look, we get that the government has got to respond in some fashion …. But at the same time we urge the government to use caution," he said, comparing tariffs on imports to chemotherapy: "It poisons your own people in order to try and fight the disease."

"It's going to have an effect everywhere," said Sophie Avernin, director of De Grandes Viñedos de Francia in Mexico, noting that many Americans own Mexican alcohol brands and Modelo beer is actually owned by a Belgian company.

Trump, who has embraced tariffs as a tool to address issues far removed from trade, has dismissed concerns about any collateral damage to the economy in the US.

But analysts have warned the measures will weigh on growth, raise prices and cost the economy jobs - roughly 286,000, according to estimates by the Tax Foundation, not including retaliation.

Those in the alcohol business said the industry had already been struggling to emerge from the shadow of the pandemic and its after-shocks, including inflation, which has prompted many Americans to cut back on dining out and drinking.

Smaller firms, who typically have less financial cushion and ability to swallow a sudden 25% jump in cost, will bear the brunt of the disruption.

"I'm pretty frustrated," said California-based importer Ben Scott, whose nine-person business Pueblo de Sabor brings in brands from Mexico such as Mal Bien and Lalocura.

"There's just a huge cost that's going to affect so many people in ways other than they're paying a couple bucks more for a cocktail, which doesn't sound like a tragedy."

Fred Sanchez has spent years pushing to expand his business, Bad Hombre Importing, a small California-based importer and distributor of Mexican agave-based spirits like Agua del Sol, and was recently working on deals in New York and Illinois.

But his potential partners started hesitating as Trump's tariff talk ramped up last year.

Now, instead of expanding, he is contemplating selling off his stock of liquor and possibly shutting down. He said he had little capacity to absorb the jump in costs and saw little scope for raising prices in the current economy.

"25% is just not something that we can realistically pass onto the consumer," he said.

Sanchez said he believed that Trump might be using tariffs as a negotiating tactic, and the tax could be short-lived. Still, for his business, damage is already done.

Everyday Drinking: Is Armagnac The New Bourbon? Or Is It The New Mezcal?

An exercise in reading beyond the headline. Plus, my picks and tasting notes on 16 bottles for your holiday splurge.

People often ask me, “What’s the difference between Cognac and Armagnac?” (Yes, I exist in incredibly nerdy spaces). To be honest, there as many similarities as differences. They’re both brandies made from grapes, often the same grapes. They’re both made in southwest France, less than three hours drive from one another. At the top end, they’re both expensive. But there are key differences, both technical and cultural. Below, I’ve posted my Armagnac 101.

More than anything, Cognac is bigger than Armagnac. Much bigger. Cognac represents a $4 billion market global market, with 225 million bottles sold each year. Meanwhile, Armagnac sells around 5 million bottles in a year. That means you don’t have huge multinational players like Hennessy or Rémy Martin in Armagnac. Instead, it’s mostly smaller family estates. Most don’t even own stills, but rely on itinerant distillers going from house to house after harvest and fermentation. There simply isn’t as much Armagnac in the world.

That scarcity and local grassroots production is why people often make this analogy: Armagnac is to Cognac what mezcal is to tequila. In the craft spirits world—where mezcal has cool, trendy, insider buzz—that’s not a bad place for Armagnac to be.

That seems to be what some in the industry are banking on. For instance, in late 2021, the venerable brand Marquis de Montesquiou, one of Armagnac’s largest producers, was bought from Pernot Ricard by Alexander Stein, the entrepreneur who created Monkey 47 Gin—which Stein had previously sold to Pernod Ricard. “He thinks Armagnac is the new mezcal,” said Jean-Francois Bonnete, the president of BCI, which imports Marquis de Montesquiou. It will be interesting to see how the brand, which has slipped in quality, will evolve under Stein.

Meanwhile, Stein isn’t the only industry bigwig who’s invested in the region. And a some of the other players don’t see Armagnac as the new mezcal. Rather, they’re banking on it being the new bourbon.

A few years ago, Raj Bhakta, one of the founders of Whistle Pig whiskey, bought the entire stock of a traditional Armagnac house, Ryst Dupeyron. In 2021, Bhakta told me that he’d “transferred the majority of it to Vermont,” where it would be finished in Islay whisky barrels. He released the blends a barrel at a time. “Technically it is Armagnac, but I’m not calling it Armagnac,” Bhakta told me at the time. Still, all of his promotional material clearly mentions Armagnac as the spirit’s place of origin.

Bkakta is clearly trying to appeal to a certain kind of American whiskey drinker, to blow them away with a 50-year age statement on the label. “The American whiskey drinking is dying for something new. He just doesn’t know it yet,” he told me in 2021. But Bkakta made clear he has little intention of educating his bourbon bros on Armagnac when he declared: “Armagnac just doesn’t have much brand value.” I mean, that’s some serious hubris there. But I guess it’s no less arrogrant than taking something a family aged for five decades in the French countryside and sticking in a Islay whiskey barrel for a few months to, ahem, “finish” it.

I’ve written before about this whiskey-fication of Armagnac. I’m very clearly on the record as saying this is not a good thing.

Nicolas Palazzi of PM Spirits, which imports a number of top Armagnacs, summed up the current market like this:

“There’s more Armagnac being sold, but it’s a very specific kind of Armagnac sold to a specific kind of buyer. We’re talking about Armagnac that’s very extracted, heavier on the wood, more powerful, more vanilla. So it’s not very different than the whiskey that people are drinking. We’re selling a lot less classical Armagnac.”

In other words: Armagnac that tastes like bourbon. Still the big question for Armagnac in the U.S. is whether or not whiskey drinkers—tired of ridiculous bourbon prices—will embrace brandies they likely can’t pronounce.

When I think and talk about Armagnac, I am a million miles away from the whiskey market. Gascony is a rustic, agricultural place of small towns that’s famous (or infamous) for the ducks and geese raised for foie gras (more than once been I’ve been served a “salad” in Gascony that was literally all meat). I posted recently about my pilgrimage to some revered small estates. Armagnac is a fragile place, and there is legitimate worry about whether it can handle becoming the new bourbon or the new mezcal.

We love the allure of drinking from decades-old barrels that a négociant—a treasure hunter—has discovered and procured from an elderly grower, or a widow. But those barrels often represent the end of a multi-generational wine-growing family. The numbers don’t lie: In 50 years, the total vineyard area of Armagnac has shrunk from 10,000 to 2,000 hectares. “This tradition is dying,” says Lili de Montal, at Château Arton, with around 40 hectares in Haut-Armagnac. “It’s not an overstatement to say it’s a disaster.”

A few weeks ago, I went to a tasting of Château de Laubade in New York, hosted by Denis Lesgourgues, whose family has run the estate for three generations. It was a small group, mostly people from the trade, and I thought Lesgourgues’ presentation was a good model for how Armagnac might move forward into an uncharted market.

Among the samples, we tasted an experimental bottling made from the rare plant de graisse grape, as well as Laubade’s new 21-year-old expression. That age statement is itself not common. “You don’t see a lot of age statements in Armagnac,” Lesgourgues said, adding: “We’ve been thinking about whiskey drinkers. The price of 21-year-old whiskey is very high. So we feel this is a chance for whiskey drinkers to try a 21-year-old Armagnac.”

I’ve known Lesgourgues for about a decade, and back in 2021, he and I had a disagreement over a Armagnac he released that was finished in Bardstown bourbon barrels. His new 21-year-old feels like a much better approach to meet the whiskey drinker with an Armagnac that’s still got the classic profile. (I recommend it below in my bottle picks).

After the tasting, everyone in attendance split into groups and we blended our own Armagnac from the 2008 vintage from aged samples of four specific grapes: ugni blanc, baco, colombard, and plant de graisse. Besides being fun (my team of course made the best blend; I got an embossed certificate!) the exercise focused attention on the raw ingredients, the grapes and the wine. It drove home to the people in attendance just how different Armagnac is from nearly any other spirit.

Los Angeles Times: A mecca for mezcal: These are the best agave bars in L.A.

“You’ve got to put a bottle of mezcal on the ofrenda,” says Ivan Vasquez, owner of Madre Oaxacan Restaurant & Mezcaleria, with four locations across L.A. County and the largest small-batch mezcal collection in the U.S. “For me, and back in the villages, a bottle of mezcal has to be there.

“On Día de los Muertos, you drink a copita with your loved ones,” Vasquez instructs. “It’s the only spirit that keeps our loved ones alive. When I drink mezcal on Día de los Muertos, I’m reunited with my grandpa. Thanks to him, I was introduced to mezcal.”

While tequila has had a couple centuries to gain an international following, the rise of mezcal and regional spirits like sotol and bacanora is more recent. It was only in the ‘90s that mezcal gained Denomination of Origin (DO) status, which restricts legal and commercial use of the word, and paved the way for it to be sold across the globe.

The spirit, which imparts earthy tasting notes, exploded in popularity over the pandemic, partially because of the heritage involved — mezcal producers, or mezcaleros and mezcaleras, often utilize methods that have been honed across generations and are unique to their family or village. The final product, Vasquez says, delivers a flavor that can be more layered and complex than wine.

Also known as maguey, the spiky agave plant has been revered by Indigenous Mexicans for millenniums, providing food, practical items such as rope and sandals and fermented beverages like pulque. When Spanish colonizers arrived with the still, agave wine was distilled into spirits like tequila, made exclusively from agave tequilana, and mezcal, which can be made from over 40 other agave types.

“Los Angeles is like the mecca right now for agave distillates,” said Rocío Flores, a mezcalera who grew up splitting time between L.A. and Jalisco and now hosts agave tastings and educational experiences, including the program at Guerrilla Tacos. “It’s probably the one place in the world where you can find the most diverse, the most amazing mezcals that you can’t even find in Mexico in one place all together.”

The global appreciation for Mexico’s ancestral spirits has influenced the tequila industry too. For his part, Vasquez only works with small producers and serves tequila blanco exclusively — no reposados or añejos. When customers ask for corporate brands like Casamigos, he and his staff use it as an opportunity to educate.

“I tell them, ‘Let me bring you several options that are higher proof at a lower price’ and I ask them to enjoy it neat,” he says. “They’re just amazed when they try it.”

L.A. was already a great place to drink agave distillates, but these days the options are overflowing. Included on the list below are agave-focused bars that prioritize stocking small-batch producers and offer flights that encourage imbibers to sip in the traditional style. Some, like Vasquez, even sell rare bottles out of their bars. Whether you’re toasting in celebration or stocking up to savor with your ancestors on Día de los Muertos, these are the best agave bars in Los Angeles.