Justin Warner corks a bottle of nero d’avola Saturday night at BB’s Natural—a wine bar in downtown Rapid City.
As the burgundy beverage spills into a wide-bulbed red-wine glass, both he and his spouse and co-owner Brooke worry how tariff uncertainty will affect their business.
“Everyone’s just trying to figure out what this looks like and it’s still pretty unclear at this point," Brooke said.
Brooke said they opened BB’s so they could bring in sustainably produced wines from around the world that are hard to find in South Dakota.
Last week, President Trump announced a 20 percent tariff on all goods from Europe, as well as tariffs ranging in different percentages. Shortly after SDPB spoke with the Warners, Trump reversed course — but is maintaining a baseline tariff rate for most countries of 10 percent. China faces an even higher tariff rate - 125 percent.
BB’s brings in wines from across Europe, Australia and South Africa.
“We’re still basically a restaurant and the profit margins are quite slim," Brooke added.
Trump is not ruling out future tariffs. He has threatened upwards of 200 percent tariffs on alcohol from Europe.
The Warners say they’ve talked to their distributors who’ve said there’s a lot of uncertainty.
Justin said increased prices can lead to less options on the menu.
“When South African wine is relatively inexpensive or around the same price as something else, you say, ‘Yeah, let’s try that,'" Warner said. "But, if all of the sudden, the South African wine is so much more expensive than something made in the United States people aren’t going to take that jump. And when you don’t take that jump you learn less about the world around you. That’s where we shed a tear.”
Despite being relatively insulated from large market swings, even regions like the Black Hills and western South Dakota are affected by the looming trade war.
Tom Johnson is the CEO of Elevate Rapid City, a chamber of commerce group focused on economic development in the Black Hills region. He said if the tariffs at levels announced on Trump’s Liberation Day were to stay in effect for longer than three months, jobs in the region would get put at risk and prices would rise.
“We’ve looked at a lot of the data and we think there’s about 2,000 jobs potentially at risk in Pennington County, Rapid City area. The Black Hills, maybe 2,500," Johnson said. "And that really depends on how long these last.”
Johnson said the biggest effect will be on construction and the agriculture economy. He said increases in costs caused by long-term tariffs could affect the region’s ability to expand Box Elder in response to the B-21 arriving at Ellsworth Airforce Base.
“Long term, it will raise construction on the base. It will raise the cost of construction and home prices," Johnson added. "It will lead to, probably, higher interest rates long term. Inflation, which will then mean more folks can’t afford a home.”
However, others see Trump’s trade war as an opportunity to protect American markets by disincentivizing certain products coming into the country.
Chuck Willard, president of South Dakota Stockgrowers Association, said trade with New Zealand and Australia has decimated the sheep industry.
“We’ve fallen down there, as far as one of the reasons for tariffs, and that’s protection," Willard said. "Our U.S. cattle herd is at a 71-year all-time low.”
According to the USDA, the U.S. imports over a billion more pounds of beef that it exports.
Willard said resetting the beef market also presents an opportunity for country-of-origin labelling.
“You have consumers across the United States, in every poll, wanting to know where their beef comes from, their lamb comes from. And the producers want it. I just don’t see the problem in not getting it," Willard said. "My own personal opinion is the packers are in control and are making billions and billions of dollars by not labelling. So, of course, they’re going to fight it.”
Republican Rep. Dusty Johnson said he’s not a fan of tariffs as a long term solution, but that the U.S. has a chance to negotiate better trade deals.
“Let’s make sure that we use these tariffs as a point of leverage—not to have less trade—but to have even more of an opportunity to sell the world’s best beef, corn, dairy, beans that’s here in South Dakota to the rest of the world," Johnson, South Dakota's lone representative in Congress, added.
Back at BB’s Natural Wine Bard in Rapid City, the Warners calculate the world around them.
“The idea that, when we opened a wine bar we would ever think about just a 20 percent increase across the board. That’s not how business—it doesn’t just swing that quickly. It’s like getting hit by a financial bus, you know?”
But, for the next 90 days at least, they’ll have manage that 10 percent global tariff.
