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U.S. Whiskey Exports Dry Up As Tariffs Bite

By Steve Wynne-Jones
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U.S. Whiskey Exports Dry Up As Tariffs Bite

American whiskey exports slumped in the second half of 2018, taking a blow from higher duties by the country's trading partners following President Donald Trump's tariffs on steel and aluminum imports, an industry group said on Thursday.

Canada, China, Mexico and the European Union slapped import duties ranging from 10% to 25% on U.S whiskey and bourbon last year, resulting in a 11% drop in U.S. whiskey exports in the second half, according to a report from the Distilled Spirits Council.

Initial Boost

For the first six months of 2018, whiskey exports grew 28% compared to the same period in 2017, partly helped by companies like Jack Daniels maker Brown-Forman Corp, fast-tracking shipments overseas, especially to Europe, before the tariffs kicked in.

Overall for the full-year 2018, whiskey exports rose 5.1% to $1.18 billion, a significant drop from the 16% rise seen in 2017.

Exports to the European Union fell 13.4% in the second half of the year, after rising 33% during the first six months.

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The European Union, which imposed a 25% tariff on American whiskey, is the largest market for the liquor, accounting for nearly 60% of total exports, according to the Council.

Absorbing Costs

Earlier in March, Brown-Forman said absorbing the costs of tariffs in key European markets was the primary reason for the decline in its third-quarter gross profit margin.

The company also said its sales would take a hit in 2019 if the tariffs were to remain in place.

"The damage to American whiskey exports is now accelerating, and this is collateral damage from ongoing global trade disputes," Distilled Spirits Council Chief Executive Officer Chris Swonger said.

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Total U.S. spirits exports rose 9.5% to $1.8 billion in 2018, but also slowed from 2017, the report showed.

News by Reuters, edited by ESM. Click subscribe to sign up to ESM: European Supermarket Magazine.

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