In the realm of spirits, American whiskey stands tall, boasting a rich history and a spectrum of flavors. However, this beloved industry faces an imminent peril, courtesy of the European Union’s relentless assault on American whiskey.
European Union’s War On American Whiskey Heats Up https://t.co/AqCCXuLv93
— zerohedge (@zerohedge) October 19, 2023
Five long years have passed since the EU slapped American whiskey with a 25% retaliatory tariff, casting it as collateral damage in an unrelated trade dispute during the Trump era. This move inflicted a severe blow to U.S. whiskey exports to Europe, which had been a vital catalyst for the industry’s expansion across 28 states.
Thankfully, the Biden Administration threw distillers a lifeline two years ago by brokering a temporary tariff suspension. But now, as this respite nears its close, the situation grows bleaker. Without a new agreement by the end of October, distillers face a grim prospect — tariffs could surge to a debilitating 50%.
Such an exorbitant tariff would deal a devastating blow to craft whiskey exporters like Dr. Sonat Birnecker Hart, the visionary behind Koval Distillery in Chicago. After years of painstakingly nurturing relationships with foreign distributors and securing a foothold on European shelves, the initial tariffs were a painful setback.
While she managed to rebound during the suspension, a 50% tariff would obliterate her European profits, leaving her with a painful choice — either hike prices and surrender her competitive edge or absorb the costs and pray for tariff removal down the road.
The ramifications of a 50% tariff extend beyond individual distillers like Dr. Hart. During the suspension, American whiskey exports to the EU surged by 118% in the first half of 2023 compared to the same period in 2022. These remarkable figures could have soared even higher without the looming tariff uncertainty.
Time is of the essence for U.S. trade representatives and their EU counterparts, who are slated to convene during a European summit on October 20 for discussions. Their imperative mission is to secure the permanent removal of these tariffs to shield the American whiskey industry from further harm.
American distillers are not mere purveyors of a beloved libation; they are substantial contributors to the U.S. economy. The number of distilleries in the U.S. has swelled from 35 two decades ago to a staggering 2,600 today, underscoring the industry’s paramount significance. These distilleries source grains from local farmers, bolster bottling and manufacturing firms, and inject vitality into tourism, employment, and culture in communities nationwide.
Moreover, American whiskey commands popularity both domestically and internationally, with Europe reigning as the prime export market for U.S. spirits. Surrendering this pivotal market would inflict damage on distillers and the interconnected supply chain. Furthermore, this tariff skirmish jeopardizes the industry’s global prestige. European consumers might pivot to Scotch, Japanese whiskey, or spirits from other regions if prices balloon due to tariffs.
The time is ripe for policymakers to rise to the occasion and defend one of America’s most substantial contributions to the global spirits arena. The fate of American whiskey, along with the jobs and economic prosperity it ushers in, hangs in the balance.
