American Tariffs Are Bad for Booze. European Tariffs Would Be a Disaster.
American distillers have already taken heavy collateral damage in a trade spat over airplane manufacturing subsidies—and now things could be taking a turn for the worse.
If the European Union (E.U.) follows through on a threat to impose $4 billion in new tariffs against American-made goods, booze is likely to be one of the major targets. Earlier this month, arbitrators at the World Trade Organization (WTO) granted permission for the E.U. to impose those tariffs in retaliation for more than $7 billion in new tariffs levied by the Trump administration on European imports in October of last year—those 25 percent levies targeted “cultural goods” including Scotch whisky, Italian pasta, and German ham.
If Europe decides to retaliate, it would represent another major escalation in a years-long dispute over how governments on both sides of the Atlantic subsidize the manufacturing of airplanes—a conflict that has already done significant damage to unrelated industries, like the production of alcoholic beverages.
According to trade data tracked by the Distilled Spirits Council of the United States, an industry group, American whiskey exports to European countries declined by 41 percent from August 2019 through July 2020. That decline represents more than $300 million in lost sales to the largest export market for American whiskey.
The fact that tariffs on imported booze could have damaged American exports of the same products might come as something of a surprise. If tariffs worked the way
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