How Trump Tariffs Could Affect the Whiskey and Spirits Market

Scott Harris, founder and general manager of Catoctin Creek Distillery in Virginia, did not mince words when I asked him about the tariffs imposed by the E.U. on American whiskey during the Trump administration. “The first round of Trump tariffs killed our E.U. business dead,” he tells Robb Report, noting that he doesn’t anticipate any relief in the near future. “It would be hard to kill it further. We’ve instead shifted our focus to other markets like the U.K., Australia, Mexico, and perhaps Taiwan. If you detect bitterness in my answer, it’s because I am indeed bitter.”

Harris is certainly not alone in this feeling. There are just days until the 2024 presidential election, if you can believe it, and the two candidates (Trump and Harris if you’re living under a rock) have vastly different positions on many important issues, from abortion rights to healthcare to the economy. While bourbon and rye might not be the most important issues on the minds of those who are anxiously awaiting the outcome of the election, which at this point is most of us, the American whiskey industry is certainly paying close attention. That’s because, no matter who wins, a new 50 percent tariff could be imposed on American whiskey exports, which could mean real hardship for some distilleries and a death blow to others. Not to mention there’s the lingering threat of America imposing a 25 percent tariff on scotch whisky that has the industry on the other side of the pond worried as well.

The Impact from Trump’s First Round of Tariffs

The initial 25 percent tariff on American whiskey was imposed by the E.U. in 2018 as a retaliatory measure to the Trump administration’s tariffs on imports of steel and aluminum. There was speculation at the time that this was specifically designed to get the attention of then Senate Majority Leader Mitch McConnell, the senior senator from Kentucky which is the epicenter of the bourbon industry. This had a detrimental effect on American distilleries, particularly in the craft world, with exports to the E.U. falling by 20 percent through 2021, the equivalent of about $112 million in lost revenue. Indeed, some smaller operations, like Catoctin Creek, have never fully recovered. In response, the Trump administration put a 25 percent import tariff on single malt scotch whisky, further escalating the spirits trade war and shocking many in the industry after a quarter century of zero tariffs on scotch.

Biden and the E.U. Suspended the Tariffs, but They Still Loom

After initially leaving the tariffs in place, the Biden administration worked out an agreement with the E.U. and they were suspended in December of 2023, providing welcome relief to some, if not all, American whiskey producers. According to Robert Maron, senior VP for international trade policy and market access for DISCUS (Distilled Spirits Council of the United States), over the past year American whiskey exports to the E.U. grew by more than 60 percent, and total spirits exports soared to a high of $2.2 billion. But that suspension is set to expire in March of 2025, and if a new agreement is not reached the tariffs will increase to a staggering 50 percent. Also, if trade disputes between the U.S. and the E.U. and U.K. regarding Boeing and Airbus are not resolved by July of 2026, there will be an additional 25 percent tariff imposed on American rum, brandy, and vodka.

I spoke to Chris Swonger, president and CEO of DISCUS, and while he clearly tries not to take a political stance, he is very concerned about the impact of these trade wars on American spirits. “American distilled spirits are not a commodity, with all due respect to commodity products,” he tells Robb Report. “They’re ultra premium products, and it takes time and effort to invest in them, so the spirits industry should be immune from tariffs and counter tariffs. We’ll work hard with either administration that comes in to help them understand that, as well as with the E.U.”

Trump and Harris Tariff Policies

It seems a bit disingenuous to say that the tariff issue would be as big a concern under either Trump or Harris. Only one candidate is making direct threats about future tariffs that would have a significant impact on the American economy, and that is Donald Trump. According to CNN, Trump has said that he plans to impose an across-the-board tariff of up to 20 percent on every import coming into the U.S., and up to 60 percent on goods coming from China. Harris, on the other hand, has called Trump’s proposed tariffs a “sales tax on the American people” because these costs will likely be passed on to American consumers. That bottle of scotch or Cognac you have your eye on could go up in price significantly, and American distilleries could be forced to raise prices on their domestic prices to offset tariffs overseas. Of course, Harris might seek to keep or institute tariffs of her own, specifically when it comes to Chinese products.

What Could a Trade War With China Bring?

We aren’t importing a huge amount of spirits from China, which primarily makes baiju although there is a single malt whisky or two being made there now as well. But the Chinese market can be an incredibly lucrative one for exports—and while the American whiskey sales there relatively small, it’s still a growing and enticing market. A trade war could bring that all to a halt, however, as evidenced by the staggeringly high tariffs put on Australian wine in 2020 that reduced sales of that category in China by 99 percent. China imposed tariffs between 100 and 200 percent on Australian wine imports after the prime minister at the time, Scott Morrison, called for an investigation into the origins of Covid, specifically focusing on China. This essentially killed Australian wine sales there and sent the winemakers Down Under scrambling to move their bottles to other markets. Fortunately for them, an agreement was reached earlier this year to ease the trade war. There could be a similar disastrous effect on American whiskey sales in China if there are tit-for-tat tariffs during the next administration.

What Would New Tariffs Do to the Collector Market?

Readers of Robb Report are well aware that there are many ultra-aged single malt whiskies that hit the market commanding prices in the five-figure range like the $53,000 Balvenie 50 above or Macallan’s the Reach, which retailed for $125,000. While Swonger says he doesn’t expect tariffs to greatly affect this market, it’s not hard to imagine a hefty premium could depress interest from buyers.

We reached out to several major single malt scotch distilleries for comment on how sales of their most collectible bottles might be affected, but they declined, perhaps unwilling to take what might be perceived as a political stance. The reality is that the return of tariffs could affect the collectors’ market, driving up prices of ultra-aged, high-end bottles for consumers. There is a chance that could move more spirits collectors to domestic auction houses and websites—since these bottles are already in the U.S., you might be able to get a better deal than you would buying one from a distillery’s private channels.

Tariffs may also change what limited-edition, high-end bottles get allocated to America in the first place. As noted above with the China-Australia trade war, Aussie winemakers started sending premium offerings more to other markets after China instituted high tariffs. A similar situation could happen for spirits, with limited allocations of ultra-aged collectible whiskies being offered to other markets outside of the U.S. first.

Mark Kent, chief executive of the Scotch Whisky Association, dreads the prospect of the 25 percent tariff returning and says the industry lost £600 million ($778 million) during the first round. “The impact fell disproportionately on small and medium-sized distillers across Scotland, who only produce single malts, but the whole industry lost sales and market share in what has been for decades the industry’s largest and most valuable market,” he told Robb Report. “The industry was collateral damage in a trade dispute about aerospace subsides. These tariffs must never be allowed to return and cause further damage to Scotland’s distillers.”

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The Spirits Industry Prepares for After the Election

I asked Swonger if DISCUS had a stance on whether one candidate might handle the tariff issue better than the other. While he acknowledged that Trump’s proposals are causing some concern in the industry, he avoided taking a side, which makes sense, given that DISCUS is a lobbying organization. “Certainly the campaign rhetoric coming from candidate Trump creates anxiety within the marketplace,” he said, but followed up to say that if the Trump wins the presidency again, the organization would work with both him and the E.U. to lessen the impact of potential tariffs.

Still, leaders in the industry are preparing themselves. The CEO of Beam Suntory revealed recently that his company would look for operational changes that could help with tariffs if they were to be imposed. Takeshi Niinami told Time he was working to reduce operating costs at existing facilities so improved gross margins could lessen the impact. He added that the company was working to position its brands as more premium so they could command the higher price point that may be coming. And in the ready-to-drink market, Beam Suntory will use what he called a “Coca-Cola model,” where the company supplies concentrate to partners in local markets that manufacture the final drink, so the beverage sold is a country is made there. “We have to make use of innovation to overcome the situation of the higher tariff world,” he said.

With Trump, the debate is always whether to take him seriously or literally, or both. But all indications would point to him enacting the economic policies he’s espousing, particularly in a second term where the guardrails are completely off. Overall, Swonger says that the spirits industry views the impending election, and decisions on tariffs that will be made somewhere down the road, with a mixture of hope and anxiety. “The industry has experienced a bit of a reset post-pandemic, and it has not been immune to supply chain and inflation challenges that the U.S. has experienced over the last two or three years,” he says. “American whiskey has continued to grow, tequila has has grown, consumers have gravitated to ready-to-drink cocktails. We are hopeful, but when you have a looming 50 percent tariff on American whiskey literally five months or six months away, yes, we’re anxious.”