Craft whiskeys, an American success story, are facing death by trade war
The whiskey industry has become a symbol of the American dream. Fifteen years ago, U.S. distilleries numbered around 50, with large brands like Jim Beam, Wild Turkey, and Jack Daniels joined by just a small handful of craft distillers. Today, their ranks have swelled to more than 2,000, driven by an explosion in demand for craft brands — not only among Americans, but also consumers in Europe, the United Kingdom, and other foreign markets. In 2018, $702 million in American whiskey was exported to the EU, up 40 percent from a decade prior.
Now, this global success is in jeopardy, along with hundreds of craft brands.
American whiskey makers are already suffering from 25 percent tariffs imposed by the EU and UK, which have slashed U.S. whiskey exports over the past year by 37 percent to the EU and a staggering 53 percent to the UK. But it will soon get much worse. The EU’s tariff is set to automatically double on June 1, less than two months from now, to a lethal 50 percent.
The tariffs are a product of the Trump administration’s lingering trade war with the EU and UK over aluminum, steel, and the aircraft manufacturers Boeing and Airbus. If you’re wondering what those issues have to do with whiskey, so are hundreds of frustrated distillers. They are collateral damage in a trade war that has nothing to do with them.
If the tariffs are allowed to double in June, it could spell catastrophe for distillers like Dr. Sonat Birnecker Hart, president of the women-owned Koval Distillery in Chicago. Since it launched in 2008, Koval has made its way onto shelves in 48 states and more than a dozen countries. Dr. Hart’s exports to the E.U. and U.K. were climbing by 25 percent every year before the tariffs hit. Now, they’ve dropped by 60 percent. In June, they could crash to zero. This would erase years’ worth of painstaking effort to win space on European shelves and in the hearts (and cupboards) of European customers.
But there is still hope for craft distillers like Dr. Hart. It will all come down to diplomacy from President Biden and his newly confirmed trade representative, Katherine Tai.
The pair has made progress. On March 5, President Biden and European Commission President Ursula von der Leyen struck a deal for a four-month suspension of the EU’s tariffs on U.S. rum, brandy and vodka in exchange for America suspending its tariffs on liqueurs and cordials from Germany, Ireland, Italy, and Spain, as well as cognacs and grape brandies from France and Germany. On March 4, President Biden and UK Prime Minister Boris Johnson reached a similar four-month suspension of tariffs on certain distilled spirits.
Welcomed progress, to be sure. But American whiskey was conspicuously missing from both deals. With the “judgement day” of 50 percent tariffs less than two months away, more must be done — and fast.
The Biden administration must work with the EU and UK to secure the immediate suspension of tariffs on American whiskey and the permanent removal of all tariffs on U.S., EU and UK distilled spirits.
The good news is, President Biden and Representative Tai have the credibility and goodwill to stop the disaster. If they succeed, they will rescue the livelihoods of not only small distillery owners and their employees, but also thousands of workers up and down the whiskey supply chain — from entrepreneurs and factory workers, to artisans and chemists, to grain farmers and bottling experts, all of whom make up the extraordinary success story that is the American whiskey industry.
President Biden: We’re counting on you to keep their story alive.
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