American whiskey exports to EU decrease 33% following retaliatory tariff

23 June, 2020

American whiskey exports to EU have decreased by a third since the bloc imposed a 25% retaliatory tariff in June 2018.

The Distilled Spirits Council of the United States (DISCUS) released the new figures to mark the two-year anniversary of the tariff.

From January 1997 to June 2018, American whiskey exports to the EU grew five-fold, from $143 million to over $750 million.

The EU is the industry’s largest export market, and it expected exports to the region to grow by a further $300 million by June 2020, smashing through the $1 billion barrier. Instead they have decreased by 35%.

It all started when the US imposed tariffs and EU steel and aluminium. The European bloc responded by levying retaliatory tariffs on various US products, including whiskey.

The US then slapped a 25% tariff on spirits and wines imported from Europe. It has hurt the Scotch whisky industry, while French vignerons call it the “Trump tax”.

Despite the decrease in sales, the EU remained the largest export market for American whiskey in 2019, accounting for 52%.

Chris Swonger, president and chief executive at DISCUS, said: “American distillers enjoyed two decades of unparalleled growth in the EU prior to the implementation of these retaliatory tariffs

“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 tariffs have derailed a great American export success story.  Our concern is not only the significant reduction in sales to the EU, it is also the loss of consumer mindshare for these uniquely American products.”

DISCUS has produced a report detailing the impacts of the trade war.

“With the destruction caused by the tariffs and the severe impact of COVID-19 on the hospitality industry, distillers have suffered enough,” added Swonger.  “It’s time for the US and EU to resolve the trade issues and remove all spirits tariffs, so US and EU distillers can get back to building their businesses and supporting their local economies.”

Swonger said that the EU is scheduled to increase its retaliatory tariff on American Whiskey to 50 percent in June 2021. In 2019, distilleries in 35 states exported American Whiskey to the EU. Many small craft distillers, who made substantial investments to expand into international markets, have been particularly hit hard by the EU tariffs, with cancelled orders and sales calls left unanswered.

“We were off to a great start with some EU partners but since the implementation of these retaliatory tariffs from the EU, our European exports have been flat, at best,” said Jeff Quint, founder and chief executive at Cedar Ridge Distillery in Swisher, Iowa. “At this point we are really only able to tread water. We are trying hard to maintain our EU business, but can't really grow it unless and until these tariffs go away.”

Amir Peay, owner of James E. Pepper distillery in Lexington, Kentucky, added: “Before the EU tariffs on American whiskey were imposed we had been growing our exports significantly and they accounted for 10 percent of our total business.  We were planning on doubling our business in Europe and made significant effects to that end—and then we got hit with the trade war. Since then, we have lost 50 percent of our EU business and continue to face a very difficult and complex market to do business in.”

Sonat Birnecker Hart, president and owner of KOVAL Distillery in Chicago, Illinois, said: “Our international trade has been dramatically affected, not least because much of the European hospitality sector was closed for business for a number of months due to COVID-19. The tariffs have exacerbated this situation, as many distributors are trying to recoup losses by asking for lower prices. As a distillery that decided not to increase our prices abroad due to the tariffs, in hopes of remaining competitive, we are feeling the effects of them now, more than ever.”  

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