A new export report released by the Distilled Spirits Council of the United States (DISCUS) shows that U.S. spirits exports are gradually rebounding following the lifting of the EU and UK retaliatory tariffs on American whiskeys and other spirits categories.
The report found that during January-July 2022, total U.S. spirits exports, including American whiskey, increased by 21% and 22%, respectively, over the same period last year. Total 2021 U.S. spirits exports increased 14% compared to 2020, reaching $1.6 billion — a level still below the 2018 pre-tariff levels of approximately $1.8 billion.
“While U.S. spirits exports tumbled between 2018 and 2021 due largely to retaliatory tariffs on American spirits imposed by the EU and UK, this latest data is an encouraging sign that consumers in these key export markets are beginning to return to purchasing American spirits,”said Rob Maron, DISCUS Vice President of International Trade. “We applaud the Biden administration for securing important agreements to suspend retaliatory tariffs on American spirits and are working to return to permanent duty-free trade in spirits.”
The U.S. and EU reached an agreement in October 2021 to suspend the EU’s 25% retaliatory tariff on American whiskeys for two years effective January 1, 2022. The U.S. reached an agreement with the EU in June 2021 to lift retaliatory tariffs on American rum, brandy and vodka for five years effective July 11, 2021. The U.S. and UK reached an agreement in March 2022 to remove the UK’s 25% retaliatory tariff on American whiskeys on June 1, 2022.
Removal of Tariffs are Boosting Exports, but Global Economic Challenges Remain
Maron noted that for many craft distillers, it has been difficult to regain their footing in these markets due to the chilling effect of the tariffs, supply chain issues, increased shipping costs and inflation.
“It’s great the tariffs are lifted, but it’s going to take a bit more time for us to get the momentum back,” said Herman C. Mihalich, founder and distiller of Dad’s Hat Rye Whiskey in Bristol, PA. “Returning to these important international markets has been challenging. We are working to rebuild our relationship with our EU importer after being out of the market for so long and, now with Brexit, we have had to seek out and engage with a new importer for the UK.”
“Unfortunately, we are facing a much tougher competitive environment, due to the tariffs,” added Scott Harris, founder/general manager of Catoctin Creek Distillery in Purcellville, VA. “Demand is still dramatically lower than it was in 2013, when we started exporting to the EU. Many European consumers, once fascinated with the wide variety of American whiskey brands behind the bar, switched spirits as a result of the trade disputes. Given the tariffs and the current economic and geo-political dynamics, it’s been tough going to say the least.”
Maron stated that DISCUS’ export promotion program, in partnership with the U.S. Department of Agriculture, continues to serve as an important resource for distillers interested in getting their exports back on track for growth. In 2021 alone, DISCUS’ export promotion activities, resulted in more than $875,000 in new exports of American spirits products by small U.S. distillers across the country.
“Regaining the EU market is critically important for U.S. spirits exporters,” said Maron. “Our sector is not immune to the global challenges facing exporters of other U.S. goods. We are confident, that in time, EU consumers will rediscover the range of superb American spirits that distillers are carefully crafting and aging every day across the United States.”
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