Two years on, the Distilled Spirits Council is still calling for an end to the trade dispute.

By Mike Pomranz
June 23, 2020
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Given everything that’s happened in the past few months, 2018 may feel like a lifetime away. But on top of new economic uncertainty, producers of American whiskey say they are still reeling from a decision made by the Trump administration a couple of years ago.

Yesterday marked two years since the European Union officially enacted a 25-percent tariff on U.S. goods, a retaliatory move after the Trump administration placed its own tariffs on European steel and aluminum. As is often the case, this new E.U. tariff specifically targeted some iconic American products to get its point across—including bourbon and other American whiskeys. As a result, the Distilled Spirits Council of the United States says that, over the course of the dispute, exports to Europe are down 33 percent, costing the industry $300 million.

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“American distillers enjoyed two decades of unparalleled growth in the EU prior to the implementation of these retaliatory tariffs,” Chris Swonger, president and CEO of the trade association, said in the announcement. “This report makes clear that these tariffs took the wind out of the sails for American Whiskey exports to our top export market, which has resulted in a loss of more than a quarter of a billion dollars of sales.”

The Distilled Spirits Council points out that, from January 1997 to June 2018, U.S. whiskey exports to the E.U. grew from $143 million to over $750 million. The report then derives its $300 million loss figure by combining the actual 33 percent drop in exports with the projected continued growth the industry had planned to see. Further underscoring the impact, the association also points out that, even with the tariffs, in 2019, the E.U. still accounted for nearly 52 percent of all American whiskey exports.

Swonger explained that, for multiple reasons, now is the time to end this dispute. The longer the tariffs drag on, the industry will see, as he put it, a “loss of consumer mindshare for these uniquely American products.” And then, of course, there’s the pandemic. “With the destruction caused by the tariffs and the severe impact of COVID-19 on the hospitality industry, distillers have suffered enough,” he stated. And things could get worse before they get better: The council added the reminder that, if things are not resolved by this time next year, the tariff is slated to increase to 50 percent.

Meanwhile, the spirits industry as a whole has another tariff hurdle to clear even sooner. As VinePair reports, in August, the Office of the U.S. Trade Representative (USTR) will once again begin reviewing whether to add another round of tariffs to imported wine and spirits from the European Union—duties tied to a different dispute, a disagreement over aerospace subsidies. Needless to say, despite these calls to end the ongoing trade war, a fresh round of American tariffs could easily escalate it instead.