Tariffs have a bitter taste for US whiskey makers

Image: REUTERS/Larry Downing
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US whiskey makers are battling a hangover.

The Distilled Spirits Council’s updated annual economic briefing (pdf) shows 2018 as another record year for overall sales, and a ninth consecutive one of growth. Still, the industry was left with a bitter aftertaste from the effects of retaliation against Trump’s tariffs.

There was much to cheer in the first half of 2018. Total US whiskey exports reached $595 million between January and June, a 28% bump over the prior year. The situation soured from July to December, with exports at $593 million—an 11% drop from the same period in 2017. (US distillers usually fare much better in the second half of the year.)

Exports to Europe, growing at a clip of 33% in the first half of the year, declined 13% between July and December. The EU commission had imposed its 25% levy on US whiskey and bourbon in July, following Trump’s 25% tariffs on steel and one of 10% on aluminum.

The European bloc called its €2.8 billion ($3.2 billion) in overall retaliatory tariffs “rebalancing.” China also set a 25% tariff on US goods, including whiskey, in July. Mexico imposed tariffs on US whiskey in June, as did Canada in July, though its 10% levy (paywall) is milder than Mexico’s.

“We strongly encourage the administration and our trading partners in the EU, Canada, and Mexico to quickly resolve these harmful tariffs that are undercutting economic growth in this sector and adversely affecting American workers,” said Chris Swonger, CEO of the distilled spirits lobbying group.

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Trump’s trade approach has failed to rein in the overall US trade deficit, something he has railed against for decades. It reached a new all-time record in goods of $891 billion last year. The trade wars have also hit US consumers with $19 billion in added costs. But at least there’s been no added charges when it comes to taking a good, stiff drink of American-made whiskey on US soil.