The liquor business in the United regions has been hoping to avoid retaliatory tariffs on its products, but it appears like they will be impacted, especially in Southern regions.
In reaction to President Donald Trump’s new 25% tax on imported steel and aluminum that took effect on Wednesday, the European Union is preparing to impose further duties on a variety of U.S. products next month.
Beginning on April 1, the European Union is expected to impose a 50% tariff on American whiskey as part of its countermeasures. A 99-page list of American commodities that will be subject to increased E.U. duties by mid-April includes several U.S. alcoholic products, including gin, liqueurs, and cordials.
Tennessee stands to lose the most from any E.U. tariffs among U.S. states, followed by Kentucky, Florida, and Texas, according to the table that follows, which is based on 2023 statistics from the lobbying group for the U.S. liquor industry.
The lobbying group, known as the Distilled Spirits Council of the United States, or DISCUS, claims that the European Union is the largest export market for the business, bringing in $883 million in American spirits in 2023. Canada, at $262 million, came in second.
Chris Swonger, the president and CEO of DISCUS, was one of the people who criticized the development this week.
“The E.U.’s announcement to reimpose these tariffs on American whiskey at 50% on April 1 is deeply disappointing and will severely undercut the successful efforts to rebuild U.S. spirits exports in E.U. countries,” Swonger stated in a statement. “Reimposing these debilitating tariffs at a time when the spirits industry continues to face a slowdown in the U.S. marketplace will further curtail growth and negatively impact distillers and farmers in states across the country.”
In reference to the industry’s export recovery following a downturn during Trump’s first term, the lobbyist cites the European Union’s countermeasures in response to Trump’s tariffs, which are being implemented this week.
Kentucky lawmakers, both Republican and Democratic, have criticized the resurgence of trade conflicts. In a social media post on Wednesday, Democratic Representative Morgan McGarvey stated that the remedies taken by the European Union “will be devastating for our bourbon industry.”
“Our economy isn’t becoming stronger or costs are going down because of Donald Trump’s petty trade war. Our economy is collapsing, costs are soaring, and thousands of Kentuckians now have to deal with even greater uncertainty,” McGarvey continued.
Mitch McConnell, the senior senator from the Bluegrass State, issued a warning against trade wars in an opinion piece last month, while Republican Sen. Rand Paul told a podcast host last week that retaliatory tariffs will affect sales of Kentucky whiskey. The “hardworking Kentuckians who craft 95% of the world’s bourbon” may suffer, according to McConnell, the former GOP Senate leader. One variety of American whiskey is bourbon.
Lawson Whiting, the CEO of the massive liquor manufacturer Brown Forman Corp. (BF.B), stated on Wednesday that the retaliatory tariffs imposed by the European Union had put his company in a challenging position, but he also tried to sound optimistic.
“There’s been a lot of signals going on for a long time, particularly coming from the E.U. – so not totally unexpected, and we have done some things to try to get us prepared for it, but you know, it’s a tough spot,” Whiting stated at the UBS consumer and retail conference.
“I believe that the fact that nothing takes effect until April 1 was one of the nicer things that came out of the news this morning. We’ll see what happens with that. We have a few weeks to attempt to bring these parties together and work out their differences on this specific tariff discussion. However, that gives me hope,” the CEO continued.
Among the products produced by the Kentucky-based corporation are Old Forester, Woodford Reserve, and Jack Daniel’s Tennessee Whiskey. The stock of Brown Forman (BF.B) dropped precipitously on Wednesday, finishing down almost 5%.
Some Canadian regions have banned U.S. products from their liquor stores, which is another issue facing the American liquor sector. Trump’s tariffs on Canadian goods prompted such actions last week.
It’s difficult because many American-made goods are no longer available in Canada. During Brown Forman’s quarterly earnings call last week, Whiting stated, “I mean, that’s worse than a tariff because it’s literally taking your sales away.”
The Canadian provinces haven’t changed their positions yet because the Trump administration has scaled back but not completely removed the taxes on Canada. On Wednesday, the Manitoba Liquor and Lotteries Corp. and the Liquor Control Board of Ontario both persisted in informing consumers that U.S. items were unavailable.
