Spirits trade: Four years of hurt
Transatlantic trade has been harmonious for decades, but the last four years have reversed this cordial trend and ushered in a damaging trade war. Chris Swonger, CEO of DISCUS, explains how this affected the spirits sector and the challenges that were overcome to end tariffs.
In recent years, the UK, EU and US were involved in a damaging trade war that began over aircraft parts and culminated in affecting numerous different industries – not least the spirits sector.
For four long years, US whiskey was subject to punitive import tariffs in the UK and EU, and Scotch Whisky (as well as other products such as Irish whiskey, cognac and gin) experienced the same measures in the US.
But with the final trade tariff being lifted in July 2022, Chris Swonger, President and CEO of the Distilled Spirits Council of the United States (DISCUS), explains why these tariffs were so damaging and what can be done to ensure they’re not imposed again.
Q: How damaging was the tariff dispute for the US spirits sector?
A: Prior to the imposition of retaliatory tariffs on American Whiskeys, our industry enjoyed duty-free access to the EU and UK markets since 1997, which led to significant export growth benefiting producers, farmers, and transportation and logistics providers across the US.
As a result of the tariff, American Whiskey exports to the EU, our largest export market, plunged 20 percent, from $552 million to $440 million (2018-2021). American Whiskey exports to the UK, our second largest market, have declined by 42 percent, from $150 million to $88 million during the same timeframe. This period saw total US spirits fall by 12 percent and American Whiskey exports fall by 18 percent.
Q: Who should take the most credit for delivering the breakthrough?
A: Securing the removal of the EU and UK’s retaliatory tariffs on American Whiskeys would not have been possible without the strong support of the Biden administration, particularly Ambassador Katherine Tai, Secretary of Commerce Gina Raimondo, and Secretary of Agriculture, Tom Vilsak.
Q: How important was collaboration with similar organisations in Europe and the UK in this process?
A: The US, EU and UK spirits sectors are deeply interconnected through bi-lateral trade, investment flows and shared production practices. As such, DISCUS worked closely with its counterpart trade associations in the EU and UK, in complete alignment, to highlight the unintended negative consequences of the tariffs and urge the EU and UK to remove the retaliatory tariffs on American Whiskeys.
Q: Now that tariffs have been lifted, how can American Whiskeys compete in the UK with its competitive domestic market?
A: The UK is a sophisticated market where there is already an understanding of the distinctive taste profile of American Whiskey and there is strong consumer demand and appreciation for it.
However, given the UK and London’s global leadership in cocktail culture, and as Brits are increasingly looking for new and unique brands and flavours, we believe the UK will continue to be a great market for American Whiskeys.
Critical to this growth, alongside regaining market share in the UK (lost due to the tariffs), is our partnership with the US Department of Agriculture to promote American spirits exports through its Market Access Program. Through this partnership, DISCUS is working with a London-based public relations agency to support its “Cheers! Spirits from the U.S.A. campaign,” which is focused on heightening the profile of American Whiskey and other American spirits among adult consumers, buyers and importers in the UK.
Q: How can we ensure this damaging trade war is never repeated?
A: We appreciate the leadership of President Biden and his commitment to reset the relationship with our EU and UK trading partners to protect jobs and the American industry. Now that the crippling tariffs have ended, we are working to help reset and strengthen the crucial transatlantic trade relationship. This partnership is critical to accelerating the industry’s recovery not only from the retaliatory tariffs, but also the Covid pandemic and the increasing pressures on global supply chains.