Trump’s trade policies could put American whiskey in EU crosshairs
Officials could retaliate by targeting spirits
“Any efforts to impose retaliatory tariffs on U.S. spirits could hurt the sectors in both countries.” DISTILLED SPIRITS COUNCIL
The American whiskey industry is enjoying a dramatic resurgence with more than $3 billion in revenue last year, but industry experts warn that the Trump administration’s trade policies could threaten the sector’s success.
If President Donald Trump imposes tariffs on foreign steel and aluminum products, as he is considering, European officials could target U.S. products including orange juice, dairy — and whiskey — in response.
The Distilled Spirits Council cautioned that potential tariffs — reported first by the Financial Times in London — could be detrimental to the booming U.S. whiskey industry, an iconic American product with exports nearing $1 billion a year.
Export volumes of bourbon, Tennessee whiskey and rye increased 10.2% in 2016, outpacing export growth in the overall U.S. spirits industry, according to the council. U.S. distillers sold more than 21.8 million cases of American whiskey in 2016, up from 20 million cases in 2015.
“U.S. and EU spirits exporters have enjoyed duty-free access to each other’s markets for more than two decades, which has greatly benefited both spirits producers and consumers and resulted in increased exports, jobs and consumer choice,” the council said in a statement. “Any efforts to impose retaliatory tariffs on U.S. spirits could hurt the sectors in both countries,” the council said.
The whiskey and bourbon industries are key economic drivers and employers in Kentucky and Tennessee.
Kentucky produces 95% of the world’s bourbon supply. The state’s spirits industry, including Jim Beam, Maker’s Mark and Woodford Reserve, employs nearly 17,500 people and pours $8.5 billion into the Kentucky economy each year. Distilleries are investing big money into their facilities as the spirit grows in popularity at home and overseas.
Eric Gregory, president of the Kentucky Distillers’ Association, said global markets are “increasingly important” to the state’s bourbon industry with Kentucky spirits enjoyed in more than 125 countries.
In 2015, whiskeys exported from Tennessee were valued at $691 million, ranking as one of the state’s top exports. The Volunteer State is home to 30-plus distilleries although only a few of those export outside the U.S., including behemoth spirits makers Jack Daniel’s and George Dickel.
Jack Daniel’s sells whiskey to more than 160 countries, with foreign sales accounting for 60% of the company’s overall market share. The distillery recently underwent a $140 million expansion to expand production capacity and drive more traffic to its Lynchburg distillery.
Officials from Jack Daniel’s owner BrownForman and George Dickel owner Diageo referred The Tennessean to the statement from the spirits council regarding a potential tariff on American whiskey and declined to comment further.
Kris Tatum, president of the Tennessee Distillers Guild, said the organization stands against policies that negatively impact sales of Tennessee whiskey and other spirits made in the state.
“Anything that would possibly lessen the sale of Tennessee whiskey and Tennessee spirits as a whole is not something we would look forward to, but our focus is on taking care of the visitors and residents in the state of Tennessee with product,” Tatum said.
The state’s spirits industry also boosts the tourism, agriculture and restaurant industries, he added.
Indeed, whiskey’s rise has benefited U.S. farmers. According to the council, corn production used in spirits jumped 176% from 2010 to 2014, and rye production used in spirits grew 64% during that time period.
In a statement, U.S. Sen. Bob Corker (R-Tenn.) expressed concern over potential tariffs on American whiskeys.
“We are concerned the European Union may overreach and will be closely tracking this issue to ensure the Tennessee whiskey industry is treated fairly,” Corker said.
Jennifer McEachern, communications director at the Tennessee Department of Economic & Community Development, said the department is “monitoring the situation closely and will continue to support the companies that master their products in Tennessee.”