Spirits sector reacts to sweeping US tariffs
Trade bodies and stakeholders in the spirits industry have expressed concern after US president Donald Trump issued universal tariffs last week.
Tariffs continue to plague the spirits industry, as last week, Trump announced a trade policy that includes a global 10% tariff while China, Japan, and the EU were levied higher fees.
Fallout from this policy announcement continues, with spirits bodies pleading with the president to reconsider. Toasts Not Tariffs, a coalition of 54 associations across US alcohol and related industries, issued a statement seeking fair and reciprocal tariff-free trade, saying it will lead to an increase in US wine and spirits exports and investments, as well as job growth.
“The distilled spirits and wine sectors stand as a model of mutually beneficial trade, and the livelihoods of those working within them depend heavily on international trade,” the statement read.
“Most US wine exports go to countries with low or zero import duties. More than 85% of US spirits exports go to countries that have eliminated tariffs, and nearly 100% of spirits imported are from those countries. Continued access to global markets creates jobs, supporting rural and urban communities.”
‘Reduced access’
The Wine & Spirits Wholesalers of America (WSWA) likewise expressed concern over the potential impact that tariffs would have on American businesses and consumers.
“While our industry remains resilient, these trade policies create significant uncertainty in supply chains and pricing, affecting the entire beverage alcohol industry and the broader hospitality sector. Ultimately, consumers will bear the brunt of these changes, facing higher prices and reduced access to the diverse selection of products they expect,” the WSWA warned.
Many spirits categories such as Cognac, Scotch, Tequila, and Bourbon must be produced in specific geographic regions, meaning that production cannot be moved. What’s more, all of these spirits categories rely on foreign markets to drive sales.
Andrew Weir is the co-founder of Martingale Cognac and says that in some respects, the damage is being done with each passing day that tariffs are discussed and debated.
“Consumers read headlines and as far as they are concerned, many of these products are already affected by tariffs,” Weir explained. “America can’t make Champagne or Scotch or Cognac — and in some ways that’s what makes it exotic and appealing for discerning drinkers. The whole thing is madness and the longer it continues, the more jobs and livelihoods will be lost.”
‘No choice’ but to pass costs to consumers
Spiribam USA has rum, Cognac, mezcal, and more in its portfolio, and managing director Benjamin Jones notes that the US spirits industry was just beginning to gain some sense of normalcy, but new tariffs have caused confusion.
“Luxury items from France and the rest of the EU such as Champagne and Cognac will certainly be greatly affected, and prices will increase in the coming months. Consumption of imported items, particularly with higher tariffs, will deteriorate,” Jones said.
“I believe all the major brands are gathered around the poker table looking at each other to see how each will react, how much they will raise their price or absorb the additional cost versus how much market share they are willing to secede.
“As a small actor in the game, we will have no choice but to pass on the increased costs to the consumer and we will need to cut a variety of expenses and be hyper efficient in order to preserve our healthy business culture.”
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