FRANKFORT, Ky. – President Donald Trump's trade war dampened the overseas market for American-made whiskey last year, diminishing exports even as the domestic market continues to thrive.
Overall exports of bourbon, Tennessee whiskey and rye whiskey tumbled amid a trade war-induced decline in exports to key European markets. At home, U.S. sales posted solid gains, especially for pricier premium brands, the Distilled Spirits Council reported Wednesday.
For distillers, it was the proverbial glass-half-full, glass-half-empty, scenario.
“While it was another strong year for U.S. spirits sales, the tariffs imposed by the European Union are causing a significant slump in American whiskey exports,” said Chris Swonger, the council's president and CEO.
American whiskey makers have been caught in the middle of a trans-Atlantic trade dispute since mid-2018, when the EU imposed tariffs on American whiskey and other U.S. products in response to Trump's decision to slap tariffs on European steel and aluminum.
Those duties amount to a tax, which whiskey producers can either absorb in reduced profits or pass along to customers through higher prices – and risk losing market share in highly competitive markets.
The tariff headaches continued in 2019, when whiskey makers in the U.S saw their exports decline by 16% to $996 million compared to the prior year, the council said in its report.
American whiskey exports to the EU were down 27% in the last year, it said. American whiskey accounts for 65% of all U.S. spirits exports, and the EU is the top export market for whiskey makers. Exports plunged by nearly 44% in Spain, nearly 33% in the United Kingdom and almost 20% in France, the council said.
At Catoctin Creek Distillery in Virginia, prospects remain bleak for now to rebuild the business it had cultivated in Europe before the tariff fight.
“Tariffs remain in place and our business has been at a standstill with virtually no revenue coming in from Europe,” said Scott Harris, co-founder and general manager of Catoctin Creek. “We do have whiskey and warehouses in Amsterdam, but with the increased pricing due to tariffs, it doesn't move very fast.”