The European Union and the United States have once more locked horns, and this time it’s American whiskey that’s bracing for a bruising. With EU tariffs set to skyrocket to 50% on 1 April, distillers are scrambling to flood the European market before the axe falls.
Transatlantic tiff leaves whiskey world on the rocks
The EU’s decision to reinstate hefty tariffs on American whiskey is the latest volley in an ongoing trade war that has little to do with spirits and everything to do with steel and aluminium.
The European Commission, led by Ursula von der Leyen, has made it clear that while it “deeply regrets” the situation, retaliation is necessary. “The countermeasures we take today are strong but proportionate,” she stated.
For whiskey producers, though, “proportionate” might not be the word that springs to mind. The EU is the largest export market for American whiskey, and history suggests that tariffs spell serious trouble. When the EU first imposed a 25% levy in 2018, exports took a 20% nosedive, shrinking from $552m to around $440m in just three years. Once those tariffs were lifted in 2021, exports rebounded to $705m last year, according to the Distilled Spirits Council of the United States (DISCUS). Now, distillers fear history will repeat itself — but with even steeper consequences.
A race against the clock
In a desperate bid to cushion the blow, US producers are shipping as much whiskey as possible before April. “We’ve been working with our distributors abroad to provide them with a level of understanding that we do want to remain in the market,” Sonat Birnecker Hart, co-founder of Chicago-based Koval distillery told
Bloomberg TV. “We’ve also sent more product over to try and weather the storm.”
It’s a sound strategy — up to a point. Stockpiling might keep distributors happy in the short term, but whiskey, like any product, only sells if consumers can afford it. A 50% tariff is a brutal price hike and European drinkers may not be willing to swallow it.
Trump’s tariff threat
While American whiskey braces for impact, Donald Trump has thrown his own grenade into the mix,
threatening a staggering 200% tariff on European wine, Champagne and spirits unless the EU backs down. “This will be great for the Wine and Champagne businesses in the US,” he boasted on social media. One might argue that Champagne, by definition, can only come from France, but Trump has never let geography stand in the way of a good policy proposal.
Predictably, European wine producers are less than thrilled. The US is their biggest export market, and should tariffs materialise, the consequences for Bordeaux, Barolo and Burgundy could be dire. But history suggests that such threats often serve as bargaining chips rather than actual policy. Whether the President's latest trade war rallying cry will sway EU negotiators remains to be seen.
The whiskey world watches and waits
For now, whiskey makers are stuck in limbo. Brown-Forman, the company behind Jack Daniel’s, is among those most exposed, with the EU accounting for 20% of its net sales. “If imposed, I believe it could materially impact the company’s sales growth and gross margin,” said Bloomberg Intelligence analyst Kenneth Shea. Given that Brown-Forman previously absorbed the cost of EU tariffs rather than passing it onto consumers — at an annual hit of $80m — the company may once again be forced into tough decisions.
Smaller distilleries, however, may have fewer options.
As reported by AP, Louisville-based Brough Brothers, the first African American-owned distillery in Kentucky, exited the EU market altogether in 2020 due to tariff pressures. Now, CEO Victor Yarbrough warns that a 50% tariff could make a return “almost a non-starter.” Instead, the company is eyeing India and Brazil as alternative markets.
Who really pays the price?
Trade wars rarely leave any true winners. Consumers face higher prices, producers lose market share, and the spirits industry — so often collateral damage in larger geopolitical spats — ends up playing a frustrating waiting game. As SpiritsEUROPE’s Pauline Bastidon put it: “Yet again, spirit drinks have become collateral damage in an unrelated trade dispute.”
Whether the US and EU can reach a last-minute agreement remains uncertain. For now, American whiskey is flooding into Europe at a frantic pace. But come 1 April, some of those bottles might start gathering dust on the shelf.
