Tariffs and Tipples: American Whiskey Distillers Fear Trade War if Trump Is Elected in Fall

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Last week, The New York Times reported that American whiskey distillers fear a trade war in the event of a second Trump presidency. The scuff may subject brands like Jack Daniel's and Jim Beam to a dire four years in the international market. A 50% tariff on American whiskey exports to the E.U. will take effect in March unless officials reach a new deal to avoid levies. Some believe that Trump's universal tariff plan — which intends to place a 10% to 20% tax on all imported goods — might spoil negotiations. Between 1997 and 2018, distillers based in the U.S. enjoyed duty-free access to the European market. That changed after the Trump administration imposed a 25% tariff on steel and aluminum originating from the E.U. In retaliation, the E.U. and U.K. slapped American whiskey imports with a 25% tariff of their own. The move cost whiskey brands hundreds of millions in revenue as exports to Europe slumped 37% between 2018 and 2020. Those tariffs have since been postponed in part thanks to negotiations with the Biden administration. As the March deadline looms closer and closer, industry veterans are bracing for a second crash. Chris R. Swonger, the president of the Distilled Spirits Council of the United States, told the NYT that craft distillers are holding off on expanding in Europe for the time being. Swonger remarked, “That may be a bad investment for that small business." The Harris campaign has been quick to point out the implications. At the end of September, a TikTok from the Kamala HQ account coined the slogan "Trump Tequila Tax." Rather than focus on exports of whiskey, the campaign has highlighted how imports — particularly those near and dear to Gen Z consumers — might be affected under a universal tariff plan.

“Guys, the Trump Tequila Tax is insane," a creator declared with margarita in hand. "In case you haven’t heard, he wants to put an across-the-board 20% tax on all imported goods. That means he wants to tax your tequila, and your Coronas, your Modelos, you Hennessy — all of it.”

Memes and short-form videos gathered around the "Trump Tequila Tax" tagline have garnered over 3 million views across TikTok, Instagram and Facebook. Harris has yet to propose a comprehensive tariff plan rivaling the likes of Trump, though she has suggested implementing them in a "targeted" manner. She may continue in the footsteps of President Biden, who recently imposed tariffs on Chinese electric vehicles, solar cells, batteries and aluminum. Even targeted tariffs, however, can have reverberations on the spirits industry. In Sept. 2023, the E.U. announced an anti-dumping investigation into Chinese electric vehicles; within days, China threatened tariffs on European brandy. As of last week, China has formalized those tariffs. French cognac producers, who regularly make over a billion dollars per year in the Chinese market, prepare for rough waters unless the trade scuff comes to an end. [callout-app-promo]