CLOSE CALL: Bourbon Industry Dodged a Major Tariff Bullet…For Now

Man oh man, that was close…really close. The entire U.S. Distillery landscape was staring down the barrel (shotgun kind) of a potential 50% European Union (EU) Market Tariff on all U.S imported spirits, set to take place Jan 1st, 2024. Huge sigh of relief, the proposed tariff has been suspended (not eliminated) for another 15 months. Wonderful news for the moment. However, what this means theoretically, yet another anxiety ridden path awaits leading up to April 2025.

The “retaliatory tariff war” between the US and EU goes back to 2018 when the US under the Trump Admin imposed tariffs on EU imported steel and aluminum. Punching back, EU hit the US with a 25% tariff on imported spirits. Yes, it hurt. This was a devastating gut punch contributing to a 20% plunge in US Spirit imports to the EU from 2018 – 2021.

Thankfully tensions eased as the retaliatory tariffs were lifted or rather suspended on Jan, 1st 2022 for a period of 2 years, bringing us to where we are now. Below are powerful data points from the Distilled Spirits Council. Per their numbers, 2022 saw a 29% increase in American Whiskey imports to EU vs 2021. The overall 2022 value of $552m (American Whiskey to EU) even surpassed the 2017 pre-tariff level of $518m.

Cheers (for now) and a toast to a tariff free 2024 on American Whiskey headed across the pond!

Background on U.S./EU Steel and Aluminum Dispute:

·         In June 2018, the EU imposed a 25% retaliatory tariff on American Whiskeys in response to U.S. Section 232 tariffs on steel and aluminum.

·         Due to the imposition of the retaliatory tariff, American Whiskey exports to the EU, our largest American Whiskey export market, plunged 20%, from $552 million to $440 million (2018-2021).

·         In October 2022, the U.S. and EU agreed to suspend the EU’s 25% retaliatory tariff on American Whiskeys for two years starting January 1, 2022.

·         As a result of the tariff suspension, American Whiskey exports to the EU increased by 29% in 2022 compared to 2021, reaching $566 million in 2022. This accounted for 44% of all American Whiskey exports, surpassing the pre-tariff level of $518 million in 2017. Through October 2023 (latest data available), American Whiskey exports to the EU are up nearly 64% as compared to the same period in 2022 (January-October).  

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