“U.S. spirits continue to face an array of new and existing tariff and non–tariff barriers in export markets,” the Distilled Spirits Council of the U.S. said in a submission to the U.S. Trade Representative. “The U.S. spirit sector’s top trade priority continues to be securing the removal of retaliatory tariffs on U.S. spirits exports imposed by key trading partners. These tariffs seriously impede the export progress that has benefited our sector and created jobs across the country.” it added.
Due to the continued application of retaliatory tariffs, from 2018 to 2020, total U.S. spirits exports were down 23% to $1.4 billion and American Whiskey exports were down 29% to $846 million. American Whiskey drives U.S spirits exports and accounts for 61% of total American spirits exports, DISCUS said, adding that in 2020, the top five markets for American spirits exports by value were: 1)
Canada ($249 million, up 23.2%); 2) Japan ($125 million, down 9.4%); 3) Australia ($114 million, up 11.2%); 4) United Kingdom ($83 million, down 25.4%); and 5) France ($81 million, down 13%).
The top five markets for American Whiskey exports by value were: 1) Japan ($103 million, down 15.7%); 2) Australia ($98 million, up 15.8%); 3) Germany ($76 million, down 7.2%); 4) United Kingdom ($71 million, down 29.6%); and 5) France ($60 million, down 18.5%),, DISCUS said.
“The impact of restrictions related to preventing the spread of COVID–19 and the necessary closure of bars and restaurants around the world is having a compounding negative effect on exports of American distilled spirits already suffering due to retaliatory tariffs,” the study says.
Retaliatory tariffs imposed by the EU, UK, China, and Turkey have resulted in cancellations of contracts with U.S. distillers “of all sizes,” DISCUS says, resulting in many distillers cancelling or putting on hold plans to expand.
“These tariffs make American spirits less competitive and may result in international spirits consumers choosing other spirits categories that already provide stiff competition in some third markets. These markets may be lost as foreign adult consumers shift to distilled spirits produced domestically
or by our global competitors,” DISCUS warned.
In addition to retaliatory tariffs, several priority target markets maintain high tariffs and/or an array of non–tariff barriers to U.S. spirits, which inhibit the sector’s long–term growth prospects.
Among the nontariff barriers is an Australian regulation that spirits must be aged for two years. This is an issue because U.S. regulations don’t have a specific period for which Bourbon and Tennessee Whiskey must be stored. Australia has already agreed that U.S. standards govern Bourbon and Tennessee whiskey, but it is now “reviewing” their status because they don’t meet Australia’s requirement.
Australia is he third-largest export market for total American spirits and American whiskey.