On 20 January, Donald Trump was sworn in during a ceremony inside the US Capitol Building, becoming just the second US commander-in-chief to serve non-consecutive terms.
Trump’s first term was nothing if not provocative. From an industry perspective, perhaps most notable for the tit-for-tat trade war with the European Union stemming from the March 2018 tariffs on imported steel and aluminium that ultimately damaged the transatlantic trade of wine, spirits and liqueurs.
The intervening period has been a tumultuous one for the industry. Both sides of the Atlantic have experienced the Covid spirits retail boom, the post-pandemic reset and the ensuing widespread inflation and soaring cost of living.
Trump has already outlined plans to impose 25% tariffs on all Canadian and Mexican imports – a move that has the potential to rock agave spirits, Canadian whisky and American whiskey industries.
While successful 11th-hour talks with the Canadian and Mexican have pushed the date for the enforcement of the tariffs to 4 March, the threat still looms large. But these are no longer unprecedented times, and we only need to look back to his first term to see a potential vision of the future.
“Looking back at Trump’s first term, he took an aggressive trade posture that was probably unorthodox in terms of how trade matters were resolved in the past,” says Chris Swonger, president and chief executive of the Distilled Spirits Council of the United States (DISCUS).
“In June 2018 it was the EU that first imposed a 25% tariff on American whiskey and, unfortunately, it resulted in the spirits industry getting involved in a boomerang tit for tat.” Swonger continues: “I’m not trying to indict the EU for doing that, they were responding to a very unorthodox approach, but it did implicate our industry, and it got our industry kind of caught up in a five-year tit for tat that did nothing but hurt economic vitality and growth on both sides of the Atlantic.
“When the 25% tariff was imposed on American whiskey, it was ebbs and flows, but we lost 25% of American whiskey exports to the EU during that time.”
Range of impact
The impact appeared to be felt on both sides of the Atlantic. A 2021 report from the Scottish government calculating the impact that tari‑ s had on single malt exports to the US found that: “Single malt exports to the rest of the world recovered to their 2019 levels in July 2020 and even exceeded them for the remainder of the year. This suggests that demand for single malt Scotch whisky was dampened in the US compared to other export destinations.” But it admitted that: “This could be due to the tariff, but it could also be due to other factors.”
The previous trade war with the EU was a blow to the American distilling industry, and if Trump’s tariffs on Canadian and Mexican imports were to come into effect on 4 March, those distillers could find themselves in a recurring nightmare.
“There are over 3,000 distilleries in the United States now – 20-something years ago there were only about 60. Many of these are small, mom & pop distilleries making wonderful products in communities all around the United States, and we’re going to fight to make sure those distilleries can continue to export their products,” says Swonger.
“At the same time, the American consumer loves tequila, loves mezcal, loves Scotch, Irish whiskey, cognac and liqueurs that come from the EU. So, we’re working in a constructive way with the Trump White House, and with all our trading partners where tariffs could be imposed, to find common ground to avoid these tariffs.”