How Tariff Challenges Threaten American Craft Whiskey Distillers

The trade war between the U.S. and the European Union poses a significant risk to American craft whiskey distillers. The EU’s proposed 50% tariffs on American whiskey, effective April 13, threaten years of advancement and market presence in Europe. This situation grows dire as neighboring Canada continues to limit access to American products.

President Donald Trump has emphasized the need for equitable global trade. This approach has historically benefitted the spirits industry, providing small distillers an opportunity to flourish. Many craft whiskey producers now look to the president for a resolution that ensures zero-for-zero tariffs on American whiskey, particularly with the EU.

The stakes have never been higher, including job security, local agricultural support, and preserving a rich heritage in American crafting. Whiskey is deeply woven into the fabric of American history, with notable figures such as George Washington taking part in distilling rye whiskey during his presidency. The contemporary era of whiskey production shows more promise than ever before.

Stocks Rise Following The Discussion Of Tariff Policy

Over the past two decades, the burgeoning craft distillery movement in the United States has exploded from just 50 distilleries in 2005 to over 3,000 today. This remarkable growth has enhanced the reputation and diversity of American whiskey, reaching small towns across the nation, including Swisher, Iowa, where I manage my family’s craft distillery. These local products have cultivated a global following.

Bourbon stands out among our unique offerings. By regulatory definition, bourbon can originate from any state in the U.S., not just Kentucky. In 2024, bourbon exports emerged from 37 states. Recently, international markets have embraced bourbon, elevating it alongside iconic spirits such as scotch from Scotland and tequila from Mexico.

The access to international markets is vital for small distillers’ expansion. In America, the domestic demand for bourbon has its limits. The introduction of a 50% tariff by the EU would dramatically inflate prices and hinder the rising demand just as it begins to gain momentum. As a result, multiple American distilleries may need to halt exporting altogether, leading to an oversupply of bourbon within the country.

Significant Implications For Craft Distilleries

I can personally attest to the negative impact of tariffs on my business. My craft distillery, Cedar Ridge, embarked on a challenging yet rewarding journey to establish our presence in the EU in 2016. It typically requires three to five years to secure foreign distribution partnerships, promote products, and compete for visibility in new markets before profits materialize.

Tragically, just when we were gaining traction in Europe, the EU imposed a 25% tariff on American whiskey in retaliation for U.S. steel and aluminum tariffs in 2018. This punitive measure turned our business into collateral damage within a trade conflict unrelated to our industry. We were left with three options: increase our prices, absorb the costs as a loss, or withdraw from the market completely. Ultimately, we made the heart-wrenching choice to exit, a decision made by numerous distillers under similar pressures.

Previously, the EU represented the largest market for American whiskey. Between 2018 and 2021, however, our exports plummeted by 20%, dropping from $552 million to $440 million. Fortunately, the EU lifted its tariffs in 2021, allowing exports to rebound impressively to $699 million last year. However, due to lingering uncertainty about potential tariff reimpositions, many small distilleries including ours have hesitated to re-enter this market.

This uncertainty acts as a paralyzing force for small businesses. It becomes exceedingly difficult to commit to a three-to-five-year investment strategy while facing the risk of abrupt policy changes. The consequences ripple beyond our distillery, impacting not only our family and our 65 employees but also the local Iowa farmers who supply our grains, the American manufacturers producing our barrels and bottles, and various other industries that rely on us.

We are placing our trust in this administration to advocate on our behalf and restore certainty in our trade relations. Engaging with the EU is the first step, leading up to the looming April 13 deadline, followed by addressing trade fairness in Canada and additional key markets. Numerous opportunities remain where our products currently lack equitable trade treatment, and we aspire for the Trump administration to facilitate access for our esteemed American goods.

At stake is not just the immediate future of our businesses, but the preservation of America’s whiskey legacy, a tradition that spans centuries and is crafted to perfection.