The Trump administration left office more than a month ago but the impacts of its trade wars continue to be felt by spirits producers. With EU tariffs on American whiskey expected to imminently increase, industry professionals warn the situation will only deteriorate further.
On Tuesday, the Kentucky Distillers’ Association (KDA) announced that exports of Kentucky bourbon dropped 35 percent in 2020. Shipments to the EU, the traditionally largest export market, plunged 50 percent.
Those figures will make painful reading for Kentucky distillers but the KDA says worse is still to come. On June 1, the EU is expected to double its tariffs on American whiskey from 25 to 50 percent.
“We’ve said for two years now that we are cautiously optimistic a deal could get done,” Eric Gregory, president of the KDA, tells VinePair. “Now we’re starting to ring the alarm bells more because the numbers prove this is having a devastating impact.”
The ongoing trade disputes affecting American distillers stretch back to May 31, 2018, when the U.S. imposed tariffs on EU aluminum and steel products. In quick retaliation, the EU introduced 25 percent tariffs on a number of American goods, including whiskey.
According to data from the Kentucky Cabinet for Economic Development, total American whiskey exports have fallen 35 percent since 2018 to $319 million. Exports to the EU, specifically, dropped from $257 million in 2018 to $135 million in 2020, a total decline of 48 percent.
Working with the KDA, Kentucky representatives John Yarmuth and Andy Barr are drafting a letter asking the Biden administration to suspend tariffs and jumpstart negotiations. They plan on sending the letter once Katherine Tai, the Biden administration’s nominee for United States trade representative, has been confirmed.
In recent days, Tai has publicly commented on the need to rebuild trade relationships with American allies. The comments drew praise from the Distilled Spirits Council (DISCUS), an industry organization that is also hopeful the Biden administration will move quickly to resolve the tariffs affecting U.S. distillers of all sizes.
“With a looming June 1 deadline for the doubling of the EU tariffs on American whiskey, hitting pause on the tariffs is critical to the survival of many small U.S. distilleries,” says Lisa Hawkins, senior vice president of public affairs at DISCUS.
The KDA is similarly unwavering on the need for swift action. Gregory urges parties on both sides to sit down at the table — “preferably over a drink of whiskey” — and start talking again.
“There are no winners in trade wars, only consequences,” Gregory says. “[The damage to] Kentucky bourbon and American spirits in general are a consequence of this ongoing trade war. We need to get something accomplished before real long term damage is done to this industry.”
