After the U.S imposted tariffs on imported steel and aluminum from the EU — a response to a dispute involving Boeing and Airbus — the European Union (EU) imposed a 25% retaliatory tariff on American Whiskeys on June 22, 2018. Since those tariffs were imposed, American Whiskey exports to the EU plunged 33%, or $256 million.
That’s according to an analysis by David Ozgo, chief economist, Distilled Spirits Council of the U.S.
Ozgo says the actual impact was much more. Since American Whiskeys, including Bourbon, Tennessee Whiskey and American Rye Whiskey, have only a 20% market share in the EU whiskey market, “there is plenty of room for export growth.” But instead of growth, exports plunged. American whiskey exports to the EU had been expected to grow at a 5.2% annual rate. “Thus, current exports are $337 million lower than what we would have expected in the absence of the tariffs.”
“As the EU tariffs continue to reduce American exports, EU consumers will turn to other products and American Whiskeys will be forgotten by many Europeans. To fulfill their potential, EU tariffs must be removed in order to make American Whiskeys competitive again in the EU market,” Ozgo writes in his study.
“American distillers enjoyed two decades of unparalleled growth in the EU prior to the implementation of these retaliatory tariffs,” said Chris Swonger, President and CEO of the Distilled Spirits Council of the United States. “This report makes clear that 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.
“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 U.S. and EU to resolve the trade issues and remove all spirits tariffs, so U.S. and EU distillers can get back to building their businesses and supporting their local economies.”
Craft distillers have been hard hit by the tariffs, DISCUS says. Amir Peay, owner of James E. Pepper distillery in Lexington, Ky., explains:
“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.”