A bipartisan group of lawmakers on Capitol Hill is making efforts to prevent a significant tariff increase on American liquor exports to Europe. The current tariff, which could rise to a staggering 50% on January 1, has been a result of the ongoing trade tensions between the United States and the European Union. In 2018, President Donald Trump imposed heavy tariffs on most European steel and aluminum imports to boost American manufacturing. In retaliation, the EU imposed retaliatory tariffs on American products, including whiskey and spirits.
To temporarily suspend these burdensome tariffs, a mutual agreement was reached between the Biden administration and the EU, with a deadline set for January 1, 2024. However, if an agreement is not reached before the New Year, the tariffs will be reimposed and doubled to 50%. Lawmakers from both parties have expressed concerns about the impact of these tariffs on the American whiskey industry and the U.S. economy as a whole.
In a letter addressed to U.S. Trade Representative Katherine Tai, Senators Tim Kaine and Mark Warner, along with Minority Leader Mitch McConnell and several others, highlighted the devastating effects of the retaliatory tariffs on the American whiskey industry. They pointed out that between 2018 and 2021, exports decreased by 20%, resulting in a loss of $262 million. However, due to the suspension of tariffs in 2022, exports rebounded to pre-tariff levels, demonstrating the potential for growth if the tariffs are permanently lifted.
The impact of these tariffs extends beyond the whiskey industry, affecting various sectors such as hospitality, retail, importing, and distribution. Many small, locally-owned businesses have suffered greatly, particularly with the added challenges posed by the COVID-19 pandemic. The Wall Street Journal reported that the retaliatory tariffs have harmed other homegrown small businesses, including Harley-Davidson motorcycles, orange juice, and Levi’s jeans.
Efforts to resolve the tariff issue between the U.S. and the EU have been ongoing, with President Biden and EU officials meeting in October. However, a new agreement has yet to be reached. The uncertainty surrounding the potential reimposition and increase of tariffs has caused distress among trade organizations representing a variety of interests. Over 100 trade organizations, including the Distilled Spirits Council of the United States, have signed a statement expressing concern about the potential negative impact on their products, ingredients, and raw materials, amounting to over $1.43 billion.
Small distilleries like Swilled Dog in West Virginia are among those affected by the tariffs. Brooke Glover, the owner of Swilled Dog distillery, expressed her desire to export her award-winning whiskey to Europe but is unable to do so due to the impending tax increase. She emphasized the collateral damage suffered by businesses like hers that are caught up in a dispute unrelated to their industry.
As the deadline for the tariff suspension approaches, bipartisan lawmakers are urging the Biden administration to find a path forward and prevent the detrimental effects of these tariffs on American whiskey exports. The potential resurgence of the tariffs threatens to disrupt the whiskey industry and harm the overall economy.
