Portugal's Douro Valley wine producers, particularly in the town of Favaios, are facing economic uncertainty due to new U.S. tariffs on European imports. Local livelihoods tied to viticulture are at risk.

LISBON, July 22 (Xinhua) -- In the height of summer, Portugal's Douro Valley, which is renowned for its terraced vineyards and the production of Port wine, basks in brilliant sunshine, with the scent of fermenting grapes gently drifting through the air.

Favaios, perched nearly 600 meters above sea level in the valley, is sun-drenched and poor in nutrients, but ideal for cultivating Moscatel Galego, Portugal's most fragrant, sweetest, and most delicate grape variety. For decades, viticulture has steadily brought prosperity to the town.

But that steady progress has now facing uncertainty. "Everything has been put on hold," said Joao Matos, a board member of the Favaios Cooperative Winery, referring to the new U.S. tariffs. Earlier this year, President Donald Trump imposed a 10 percent universal tariff on imports from most countries, including the European Union, and signaled plans in early July to raise tariffs on EU goods to 30 percent.

Matos, who grew up among the vines, has deep roots in the industry. His hands are thick and calloused, his nails stained with earth. Despite his executive title, he still walks the vineyards, checking the ripening grapes. "Grapes, like people, aren't afraid of heat. They only fear losing direction," he said, his eyes fixed on a wayward vine. "Once they stray, they stop growing properly."

Founded in 1952, the Favaios Cooperative is one of Portugal's most emblematic producers of sweet fortified wines, now with over 500 grower members. Nearly every household in the town depends on viticulture.

The cooperative exports to 23 countries, with the United States as its most important and fastest-growing market. Last year alone, shipments to the United States brought in 250,000 euros (290,712 U.S. dollars), about 10 percent of the cooperative's total exports. The figure they hoped to double by the end of 2025. Now, those projections are in jeopardy.

"We shipped eight containers to the U.S. last year and had even more orders lined up," said Matos. "But lately, clients are writing to say they're unsure if they can absorb a 30 percent price hike." He paused, glancing toward the fermentation room. "It's difficult for them, but even harder for us."

For the cooperative, the loss of U.S. market access could mean more than declining revenue. It risks leaving investments in production unrecovered and threatens the fragile economic fabric of the village.

On a hillside just beyond the village, Manuel Silva pruned his vines. In his early sixties, Silva has been growing grapes his entire life.

"These vines are doing well this year," he said, wiping sweat from his brow. "The cooperative guarantees a minimum purchase price." Silva doesn't speak in economic terms, but he knows this: if the wine doesn't sell, the village won't survive.

His wife, Barriguda, has spent her life baking traditional bread to pair with the local wines. Now, she says, the anxiety that started in the vineyards has reached her bakery. "I don't understand global trade or geopolitics," she said. "But I've heard the words 'America' and 'tariff' so many times lately, I could scream."

Favaios represents just one corner of a broader crisis. According to Rui Paredes, president of the Douro Winegrowers' Association, higher tariffs led to immediate order suspensions, and outright cancellations. "The U.S. imports top-tier, high-value wines. Now those orders are gone, and there's no backup market. These bottles are stuck here with nowhere to go."

According to ViniPortugal, the country's national wine trade association, the United States was Portugal's second-largest wine export market in 2024, with over 100 million euros in sales. President Frederico Falcao reported a 9.7 percent year-on-year decline in U.S. sales as of May. If the threatened 30 percent tariff hike materializes, "the damage will go far beyond that," he warned.

"There's already a 10 percent tariff in place," Falcao said. "Many producers have been forced to lower their prices just to keep U.S. retail prices steady. But 30 percent is a whole different story." For most exporters, slashing prices by a third is simply not viable.

Moreover, any forced discounts at the production level could snowball into price hikes well beyond 30 percent by the time bottles reach U.S. store shelves, due to the industry's three-tier distribution system: importers, distributors, and retailers.

"Consumers won't just see a 30 percent rise," Falcao said. "They'll see prices soar, probably over 50 percent, and that will kill demand. Portuguese wines will quickly lose their foothold in the U.S. market."

"One thing is clear, there's enormous uncertainty coming from the U.S. side," he added.

As the afternoon winds stir the leaves across the slopes, Silva said "We used to live by the sky. Now, everything depends on whether America changes its mind." Tariffs, he added, "are like the Douro wind, invisible, but strong enough to break branches."  ■