Foreign retaliatory tariffs in response to U.S. duties on steel and aluminum imports caused a decline in U.S. whiskey exports in the second half of 2018, said an industry report released Thursday.
The Washington-based Distilled Spirits Council said U.S. whiskey exports totaled 593 million U.S. dollars in the last six months of 2018, slumping by 11 percent year-over-year. That, according to the report, is the consequence of U.S. trading partners levying duties on U.S. liquors beginning in June.
Canada, China, Mexico and the European Union (EU) imposed tariffs ranging from 10 percent to 25 percent on U.S. whiskeys last year, resulting in less U.S. exports of distilled spirits in the second half of the year than in the first half, which, according to the report, was untypical.
"Globally, for the first six months of the year, American Whiskey exports grew 28 percent to a total of 595 million dollars," the report said, adding that the subsequent downward trend underscored "the harm the tariffs have caused."
For the full-year 2018, total U.S. whiskey exports reached a record 1.18 billion dollars, up 5.1 percent from the previous year. That gain, the report said, was "a significant deceleration from the annual growth rate of 16 percent recorded in 2017."
"With the full year data in hand, it is clear that the retaliatory tariffs are having a significant and growing impact on American whiskey exports," said Chris Swonger, president and CEO of the Distilled Spirits Council. "The damage to American whiskey exports is now accelerating, and this is collateral damage from ongoing global trade disputes."
Total U.S. spirits exports reached 1.8 billion dollars in 2018, a 9.5-percent increase from 2017, "but the rate of growth significantly slowed from the 14.9 percent growth recorded between 2016 to 2017," the report said.
The EU accounted for nearly 60 percent of total U.S. whiskey exports in 2018, the report said, adding that sales to the EU were "whiplashed into a 13.4 percent decline in the second half" after a 33-percent growth in the first half.
Small distillers have been particularly hit hard as local distributors were reluctant to commit to new orders given the uncertainty.
Small distillers, which made substantial investments in international marketing and distribution, are not alone in suffering the impact of the tariffs, the report said. "Large distillers have reported declining sales in some key export markets as a result of the tariffs."
"We urge policy makers and our trading partners to rapidly address these retaliatory tariffs before more damage is done" to the U.S. whiskey industry, Swonger said.