Afan to Europe-f**k you guys I’m vacationing in Latin America going forward!
U.S. Whiskey Is ‘Collateral Damage’ in Trans-Atlantic Trade Fight
U.S. distillers stare down a 50% tax on shipments to Europe next year
In this case, tariffs erected to protect some U.S. industries swung back to hurt other homegrown small businesses. The bar fight over whiskey is just one example. EU tariffs retaliating against the U.S. also struck Harley-Davidson motorcycles, orange juice and Levi’s jeans. Like whiskey, those products remain on the EU’s list of suspended tariffs.
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“We’re just collateral damage,” Glover said.
U.S. and EU officials say they hope to reach a deal to avoid the 50% tariff by year’s end, likely by delaying its effective date. But there is no end in sight to the broader trade dispute, leaving the threat of tariffs hanging over the whiskey industry.
“That there’s a significant chance the tariffs could come back is really enough to deter you from wanting to make investments in these foreign markets,” said Jeff Quint, chief executive of Cedar Ridge Distillery in Iowa. “Nobody’s going to make a significant investment in teaching the world about bourbon until we know these tariffs have been eliminated.”
American whiskey makers were drawn into the trade fight in 2018 after former President Donald Trump imposed tariffs on steel and aluminum. He cited national security reasons, arguing that metals imports had eroded the country’s ability to make its own weapons, tanks, and aircraft. The EU responded with levies on a range of U.S. products, selected for their iconic status as U.S. exports and to apply pressure on politicians in Republican and swing states.
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Until the U.S. has permanently removed the steel and aluminum tariffs, “the EU cannot permanently end its countermeasures,” Olof Gill, a European Commission spokesman, said last week. “The EU and U.S. remain engaged in ongoing discussions to reach an agreement on permanently removing these tariffs.”
The EU initially set the whiskey tariff at 25%. It was suspended two years ago as part of a mutual agreement to put both the U.S. metals tariffs and EU retaliatory tariffs on hold until 2024. Unless an agreement is reached before then, the whiskey tariffs could be reimposed—this time doubled to 50%. President Biden met with European Commission President Ursula von der Leyen in late October, but that meeting wrapped up without an agreement.
The U.S. is now proposing a two-year extension of the current tariff reprieve, people familiar with the discussions said, which would keep both U.S. and EU tariffs on hold until the end of 2025. Both sides have said they want to avoid a replay of their earlier tariff fight.
“We will continue to work with the EU to find a solution that benefits our workers, stakeholders and businesses,” a spokesperson for the U.S. trade representative said.
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Prolonged uncertainty is a particular problem for whiskey distillers because their product has to age, forcing them to plan years out.
“We need to make the amount of whiskey now that we think we’re going to sell in four to five years,” said Sonat Birnecker Hart, president of Koval Distillery, based in Chicago. “You’re eating a lot of costs up front.”
Smaller craft distilleries said selling in the EU often requires a major investment for them. They have to travel overseas to trade shows and build relationships with distributors and pay for promotions like free tastings to help introduce their product to a new audience overseas. And just getting their whiskey across the Atlantic is complicated.
Amir Peay, owner of the James E. Pepper Distilling Co. in Lexington, Ky., said he imports glass bottles in the 700 mL size that is standard in the EU, fills them, and sends them back to the EU on shipping containers.
Now, “every year, every quarter we ship less and less,” he said, given the questions over when the tariffs could resume. “I have to make sure I don’t get stuck with hundreds of thousands of dollars worth of inventory in Europe that I can’t sell.”
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Peay said he has largely let his EU exports dry up since 2018. “Essentially the European business I built up has been destroyed,” he said.
Others said they chose to absorb the costs of the 25% tariff to keep their toehold in the EU market.
“If you lose your shelf space, getting back on is going to be a thousand times more difficult,” Birnecker Hart said.
As a whole, U.S. whiskey makers have largely recovered from the 20% decline in EU exports they suffered while the 25% tariff was in place, a drop to $440 million from $552 million, according to the Distilled Spirits Council of the United States. Since January 2022, when the tariff was suspended, EU exports have climbed back above the pretariff level, according to the trade group.
A 50% tariff “would be an utter disaster for the American whiskey industry here in the U.S.,” Chris Swonger, president of the trade group, said. “It’s getting frustrating being embroiled with trade disputes that have nothing to do with our industry.”
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Write to Kristina Peterson at
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Picked up on that, didya? Hired a proper professional that works with several distilleries.