(Louisville) The former Trump administration’s commercial hostilities continue to pile up American distilleries. Their situation may deteriorate in the coming months.
Bourbon whiskey, Tennessee, and rye whiskey have been excluded from recent trade deals between the United States, the European Union, and the United Kingdom. While tariffs have been suspended for some spirits, they are still at 25% for American whiskey in the European Union and the United Kingdom. It could even double in June in the European Union, the main export market for US whiskey producers.
The United States Distilled Spirits Board is appealing to sales representative Catherine Tay not to abandon whiskey producers. He urged it to press the Europeans to immediately suspend the tariffs and strike deals to remove them.
“The rapid removal of these rights will help support American workers and consumers as the economy and hospitality sector continues to recover from the epidemic,” the council said in a statement.
American distilleries have been a victim of a trade dispute between the United States and the European Union since 2018. The latter imposed tariffs on whiskey and other American products in retaliation for former President Donald Trump’s decision to impose tariffs on European steel and aluminum.
Since then, US whiskey exports to the European Union have decreased by 37%, depriving distilleries of hundreds of millions of revenue from 2018 to 2020, according to the council. He added that US whiskey exports to the United Kingdom, the sector’s fourth largest market, have fallen 53% since 2018.
Amir Bay, owner of the James E. Pepper Distillery in Lexington, Kentucky, says whiskey has become a “side victim” of the trade dispute. The conflict cost him about three-quarters of his American business. Charging 50% could drain the rest.
It is feared that “this could end our activities in Europe.”
It has already cut some deliveries to Europe to protect against increased European duties.
Duties also damaged giants of spirits.
“Our company paid about 15% of the total bill,” said Lawson Whiting, President and CEO of Brown-Forman, the popular producer of Jack Daniel’s. Duties have become a big problem for us and it is imperative to solve them as quickly as possible. ”
For Kentucky Bourbon producers, tariffs slashed their exports by 35% in 2020, with deliveries to the union down nearly 50%, says the Kentucky Distillers Association.
The European Union has traditionally been the world’s largest market for Kentucky distilleries. Its market accounted for 56% of total exports in 2017. The share is now around 40%, according to the association.
“Our bourbon sector has suffered massive damage for more than two years due to a trade war that has nothing to do with whiskey, which is to our sorrow for its president, Eric Gregory. The situation will only get worse if we fail to defuse this conflict.”
Kentucky distilleries produce 95% of the world’s bourbon supply, the association estimates.
Mr Whiting says the suspended tariffs mean that some European spirits producers can ship their products to the United States while American products are still subject to tariffs.
“We just want a level playing field for American whiskey.”
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