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The move is part of a “rebalancing” after the U.S. enacted tariffs on European steel and aluminum.

Mike Pomranz
June 08, 2018

Last week, when the Trump administration enacted a 25 percent tariff on imported steel and a 10 percent tariff on imported aluminum, the message seemed pretty clear: The U.S. was looking to bolster these industries domestically at any cost. Now, that cost is becoming clearer, and it could come, in part, at the expense of America’s bourbon and whiskey industry.

The E.U. Commission has announced that it will be imposing a 25 percent tariff on imports of bourbon and other American whiskey starting in July. This retaliatory move should come as no surprise as the European Union made this exact threat last July and the possibility has continued to fester ever since. Once the Trump administration proved its tariff talk was more than bluster, the E.U. Commission’s hand was essentially forced, and major American exports like bourbon, among plenty of others, found themselves caught in the middle.

Though going after an iconic American product like bourbon might seem like a political move—and in many ways, it likely is, both highlighting the retaliatory nature of the new tariffs and targeting a product produced primarily in Trump’s political strongholds—part of the decision is purely economic. The E.U. estimates that America’s new metal tariffs will impact about $7.5 billion worth of E.U. exports. Taxing American steel and aluminum alone wouldn’t be enough for an equivalent “rebalancing” on these duties. In fact, even with the inclusion of whiskey and other American products, the E.U. is still only adding tariffs to about $3.2 billion in U.S. imports, with the rest of the rebalance to be considered at a later date.

Meanwhile, needless to say, the whiskey industry isn’t happy. “Over the past two decades, U.S. spirits exports have increased from $575 million in 1997 to $1.64 billion in 2017,” the Distilled Spirits Council said in a statement. “However, the imposition of tariffs on these products by our major trading partners threatens to seriously impede the export progress that has benefited our sector and created jobs across the country.” Sounds like Americans need to start drinking a lot more bourbon… for a lot of reasons.

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