US tariff uncertainty takes its toll
With the tariff narrative changing by the day, the US spirits sector finds itself facing unpredictable outcomes.
*This feature was originally published in the May issue of The Spirits Business magazine.
Tariffs have dominated headlines in 2025, with the US spirits industry left in the crosshairs of a constantly evolving and at times confusing trade policy by the Trump administration. After months of rhetoric, on 2 April US president Donald Trump unveiled a global 10% tariff, with countries or regions like Japan, China, and the EU receiving steeper fees.
However, as he has done in the past, on 9 April, Trump placed a pause on those tariffs, reducing all rates to 10% for 90 days for all countries except China. This cycle of threats and delays has bifurcated the issue by which stakeholders in the industry must grapple with the possibility of tariffs, and the added costs they would bring, while also trying to make sense of the constant updates and reversals. The former can feel theoretical, something that has yet to pass, while the latter, a collective uncertainty and unease, can feel very real and present, with lasting consequences, regardless of how tariffs ultimately play out.
Impossible to function
“Nobody can work like this. It is impossible to function in this environment,” Alison Leavitt, managing director of the Wine and Spirits Shippers Association, says. “We’ve worked with a level of certainty over the years that has worked for almost all industries. There are certainly adjustments that can be made, but it’s the random nature that causes this fear and disruption. You just do not know what to expect.”
Beyond the anxiety that a head-spinning news cycle produces, Adam Spiegel, founder and master distiller of California’s Corning & Company, believes there is a cost to hard-nosed negotiation tactics, as the goodwill the US has built with global trade partners over decades has eroded quickly. He calls tariffs catastrophic, and points to liquor stores in Canada that have already pulled American-made products from shelves or prohibited them from being bought as potential outcomes of such aggressive posturing.
“There is a cost to living on an island, and unfortunately, right now, we’re feeling it,” Spiegel says. “We are finding ourselves in a place where public sentiment abroad about Americans is getting worse. So not only are the products more expensive on shelves, but now the consumer in another country, whether it’s Europe or South America or Asia, is saying, ‘Do I want to buy American products?’ regardless of how much they like them.”
One way this could manifest is in the on-premise, where international bartenders could opt to no longer use Bourbon or other US spirits should a reciprocal tariff be put in place. “In some cases, if you’re drinking a cocktail, you may not care if it’s Bourbon or rye. You may be okay with it just being a blended whisky,” he says. “If Americans are going to continue to push this button, we’re going to find people saying, ‘Hey, we don’t need to buy that stuff for a while, or maybe we don’t need to return to it at all’.”
Category growth
Broadly speaking, the Trump tariffs are intended to bring manufacturing back to the US. For geographically protected spirits like Cognac, Scotch and Tequila, that is impossible, while maintaining zero-for-zero tariffs, namely with the EU, has been critical to category growth.
In late April the Distilled Spirits Council of the United States (Discus) released its American Spirits Exports report. It found that in 2024 US spirits exports totalled US$2.4 billion, with the EU the largest market by far at US$1.2 billion, a 39% increase from the previous year. Nearly 86% of US spirits exports go to countries that have eliminated tariffs on US spirits.
Spiegel, who distills whiskey under the Sonoma County label, says 20% to 25% of his business is overseas, and even a 10% tariff would stretch a small producer like him too far, especially as the cost of goods has increased since the first Trump administration (2017-2021), when tariffs on the EU were initially introduced.
“There’s just less fat to cut to try to keep prices the same. So it’s almost impossible for anybody to maintain the margins they’ve had before and sell their products overseas,” he says. “We’re going to be in a really tough spot, trying to compete in a market that’s already still getting to know who we are.”
Leavitt says that she has seen pullback from foreign suppliers but that with more breathing space, movement is restarting. She describes the outlook as “very cautious”. Those who can afford to front-load products are doing so, but even then, there is only so much warehousing space available.
“Right now, our advice is if you have orders ready to go, get them out in this 90-day window with the anticipation that things will calm down and level out,” Leavitt says. “We just can’t continue this chaos forever, and I do think the administration has seen that immediate impact and reaction.”
Leavitt also advises her members to focus on what they control. Andrew Sinclair, CEO of González Byass USA, shares that sentiment. He says González Byass’s plan is to maintain its strategy as best as it can without making any dramatic changes over the next six months. “It’s difficult to have big knee-jerk reactions because things are changing almost on a daily basis,” Sinclair says. “We’re moving ahead with our launch plans, irrespective of what’s happening in the geopolitical sense.”
As Sinclair notes, the three-tier system in the US doesn’t enable brands to act quickly, while the fallout from the tariffs will take time to fully develop.
“Change is going to slowly unfold over the rest of the calendar year,” he says. “I don’t think we’re going to see the true impact, either on pricing or on the consumer’s behaviour, for at least the next 90 days. And it’s going to be piecemeal.”
Spiegel says in his capacity as a brand consultant, he is often asked about tariff workarounds, to which he replies there are none, but that he does advise brands to focus on their local markets and direct-to-consumer shipping where possible.
There is some hope that spirits could be spared from tariffs altogether after an early-April report that the EU planned to exempt Bourbon, American whiskey and other US-made beverage alcohol from 25% retaliatory tariffs. The move reportedly came as a result of lobbying from France, Italy and Ireland, which advocated on behalf of their respective drinks industries. The hope is that the US will return the favour and exempt wine and spirits made in the EU.
These “carve-outs” represent a path forward for the spirits industry as both sides require the other for success.
“We’re in a much better position than we were this time last month,” Sinclair says, referencing a mid-March report in which Trump threatened a 200% tax in response to the EU’s suggestion it would place a 50% tariff on American whiskey. “That was incredibly scary for a lot of people.”
Discus president and CEO Chris Swonger called the carve-outs a positive step, and a huge sigh of relief for anxious distillers across the country. Leavitt, meanwhile, says there is a lot of jockeying for position, and that it is in the best interest for both the US and the EU to keep free-trade agreements in place.
“The spirits industry has very strong lobbying efforts, as well as international ties,” she says. “It’s a very closely linked industry, so I do think that free and fair trade in this particular sector is a proven concept.
“The problem with this administration is that you have to have a really loud voice in the ear of the White House to get anything done, and right now it seems that the tech industry has that ear. I’m not sure if the spirits industry is quite as close to the top, and it needs to get there.
“So, I think the carve-outs are possible, I just think it’s going to be getting to the right people at the right time and trying to get that message across.”
Toasts Not Tariffs is a coalition of 55 associations representing all three tiers of the US beverage alcohol industry. As the tariff drama unfolds, the group has been advocating for the spirits industry, adding new members along the way. Meanwhile, during its annual conference in March in its home city of Washington DC, Discus led its members to the Capitol to speak with government officials about the issues they are facing.
As the industry continues to fight for itself, the 90-day pause provides a larger window to plan than previous 30-day delays, especially as, Sinclair notes, the tariffs feel more tangible now that Trump has unveiled his grand plan. Leavitt has told her members to write letters and call representatives to make sure their stories are being heard.
“Explain what it means to be an importer and that that creates jobs, or an exporter, and why you need the imports as well,” she says. “The senators and congressional reps out there, they don’t like this either. They are hearing every day from their constituents that this is ridiculous.”
Geographically-protected styles aside, the spirits industry relies on global trade for materials like glass and cork, and tariffs would be felt across the global supply chain. Even for Bourbon producers to sell domestically, there would be an increase in costs in addition to the loss of valuable markets.
“Different facets of the industry are crossing borders all the time,” Sinclair says. “You can’t escape being in a globally integrated industry.”
Industry insights
How can smaller brands adapt to this moment in spirits to not only survive but thrive?
David Valentine – lead distiller, Old Dominick
“In this phase of the craft spirits market, smaller brands will need to create products that are truly different from the standard flavour profiles on the market. Our Cask Strength Bourbon at 44% rye is a great example of a truly unique flavour that sets itself apart from the rest of the shelf. Most high-rye Bourbons are 20%-30% rye, while ours is 44%. That spice and rye character sets us apart from the rest of the Bourbon market.”
Tim Landers – director of production operations, Old Dominick
“Distillery customers are walking future brand ambassadors. Giving each guest the ‘wow’ factor is the most crucial step. Providing an unbelievable tour is a must. Knock-your-socks-off cocktails open the doors for retail purchases. Have an amazing Old Fashioned at the bar and then go buy the spirit, the glass, and a keepsake. It costs nothing to make someone fall in love with your product if you make them feel like you’re in love with the product.”
Related news
Spirited Awards names US finalists
