EU tariffs threaten to devastate American whiskey industry

The American whiskey industry faced an unprecedented peril when the European Union announced its intention to impose a 50% tariff on American whiskey, scheduled to take effect on April 13, 2021. This decision was a part of the ongoing trade tensions between the United States and the European Union, which have intensified due to disputes over steel and aluminum tariffs. The impending tariff posed a significant threat to over 3,000 U.S. distilleries, many of which had only recently begun to establish a foothold in the European market. Consequently, the specter of high tariffs discouraged potential exporting distilleries and prompted others to reconsider their market strategies in Europe. Furthermore, the timing of this tariff coincided with a period when bourbon’s popularity was on the rise outside of the U.S., especially in Europe. With consumers increasingly embracing bourbon as a premium spirit, the tariff threatened to stifle this burgeoning market by artificially inflating prices. As a result, many distilleries were confronted with stark choices: they could either hike prices to absorb the cost of tariffs, absorb the costs themselves and potentially jeopardize profitability, or withdraw altogether from the European market. This uncertainty regarding trade relations added to the challenges for small distilleries, many of which were already struggling due to previous tariff impacts. This predicament extended beyond just the distilleries themselves; it had the potential to affect downstream industries and local agriculture as distilleries often source grains and other materials locally. The situation was exacerbated by a precedent set in 2018, when the EU retaliated against U.S. tariffs on steel and aluminum by imposing a 25% tariff on American whiskey, leading to a 20% decline in exports from 2018 to 2021. As of today, minute trade disputes have had acute consequences on the fortunes of local businesses and communities that rely on these industries. Given the stakes involved, American whiskey distillers have been vocal about their need for the U.S. administration to negotiate fair trade agreements to mitigate the adverse impacts of tariffs and safeguard America's whiskey legacy, emphasizing the necessity of swift action before the deadline in April.