‘Tariffs hurt’: navigating the impact on transatlantic trade
With uncertainty looming about additional tariffs in the future, how can the spirits industry mitigate the potential impact?
Since this conversation took place at ProWein in March, there has been some development when it comes to the Trump administration’s tariffs. Nevertheless, uncertainty still remains for the spirits industry, and much of the discussion remains relevant.
In April, US president Donald Trump announced a trade policy that included a global 10% tariff, with higher levies for certain markets such as China, Japan and the EU.
Soon after on 9 April, the president delayed tariffs for most countries for 90 days except for China, whose tariffs rose to 125%. The reprieve means most markets will only face a blanket US tariff of 10% until July.
Jeff Diego, CEO and founder of Helmsman Imports and Drifter Spirits, and Patrick MacKenzie, director of international business development at Tennessee Distilling Group, joined moderator Melita Kiely, editor-in-chief of The Spirits Business, for an open and frank discussion about the subject.
“The smaller brands are the most affected [by tariffs],” Diego noted. “One, they don’t have money to upfront inventory, they don’t have the right cash flow, necessary cash flow. And then the second thing, they also have mostly very tight margins because they don’t have yet the capacity to bulk buy glasses or products or labels.
“So, I think for me, I would expect that in the next few years, a lot of smaller brands, some of them will close business. Some of them will definitely not be able to cope with the tariffs. So generally, that’s the feeling I get from everybody I’m talking to.”
During Trump’s last presidency, tariffs wreaked havoc on the spirits industry. After Trump announced tariffs on steel and aluminium imports from the EU, the EU retaliated with 25% tariffs on American whiskey.
This resulted in a major drop in exports of American whiskey to the EU; American whiskey exports to the EU dropped by 20% with retaliatory tariffs.
However, after the suspension, they rebounded to a record high of 60% by 2023, data from the Distilled Spirits Council of the US (Discus) showed.
“We learned that tariffs hurt,” noted MacKenzie. “Were there any key takeaways? Nothing majorly helpful. You can go to your local government, we have an organisation called Discus in the US, you can try to get your voice out there. But ultimately, it is what it is and we all just kind of have to take the punch and roll with it.”
Tune into the conversation via the video below and on The Spirits Business YouTube channel for extra insights from Diego and MacKenzie regarding US tariffs.
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