US whiskey exports fall for higher tariffs

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 per cent to 25 per cent on US whiskey and bourbon last year, resulting in a 11 per cent drop in US whiskey exports in the second half, according to a report from the Distilled Spirits Council.

For the first six months of 2018, whiskey exports grew 28 per cent 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 per cent to $1.18 billion, a significant drop from the 16 per cent rise seen in 2017.

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

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

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.

Total US spirits exports rose 9.5 per cent to $1.8 billion in 2018, but also slowed from 2017, the report showed.