Donald Trump’s historic victory Tuesday night has his critics crying in their drams. Those drams are likely to become more expensive in a second Trump Administration, depending on where they’re distilled.
Trump has never made a secret of his love of tariffs to protect domestic industries, and floated the idea of a 10% tariff on all imported goods during his campaign – the so-called “national sales tax” the Harris campaign tried to hang on him. Unlike the targeted tariff affecting single malt Scotch whiskies that was in place from 2018 through 2021 and currently is suspended while the U.S., Great Britain, and the European Union try to resolve their differences over aircraft subsidies, a new “Trump tariff” is likely to cover all Scotch whiskies.
Whiskies from Ireland, India, Taiwan, and other countries would also be affected, though it is not clear whether Canadian whiskies would be taxed because of the U.S.-Mexico-Canada free trade act negotiated during the first Trump Administration.
For Scotch Whisky interests, the U.S. remains historically the most important export market, and the single malt tariff is blamed for costing whisky makers an estimated £600 million in lost sales. The tariff was largely passed on to consumers in the form of higher prices at the retail level.
“Anything which gets in the way of tariff-free trade is a big concern to us,” Scotch Whisky Association CEO Mark Kent told WhiskyCast ahead of the election. “We are in close touch with our partners in the US, with other associations, to make the case for continuing tariff-free trade and looking to have that seamless trade.”
Should Trump carry out his threat to impose tariffs, it would likely spark a trade war with retaliatory tariffs being imposed against U.S. exports. The European Union has already targeted Bourbon and other American whiskies for retaliatory tariffs once before after the first Trump Administration imposed tariffs on imported steel and aluminum in 2018 to protect the domestic steel industry. That tariff is scheduled to resume at a 50% level next March absent an agreement on steel and aluminum trade.
“It would be awful,” said Distilled Spirits Council CEO Chris Swonger. “American whiskey exports were impacted by 30% when the 25% tariff was imposed for three or four years, so that cannot happen, and we’re going to work very closely with our European spirits industry partners to play a positive role both with the EU government and the incoming Trump Administration,” he said in an interview Wednesday. Swonger says Trump likes to use tariffs as a negotiating tool, with his objectives to reduce the U.S. trade deficit and boost domestic manufacturing.
Raj Sabharwal of Glass Revolution Imports points out that Trump incorrectly believes that exporting countries pay the tariffs, when it is actually the U.S. importer who pays the taxes. He expressed concern over the potential for tariffs at a time when the industry is already facing lagging sales.
“The industry is already feeling the economic impact which is affecting premium and super premium items. These items have witnessed rising prices, already putting them out of reach of average consumers. If the tariff is around 10% we may be able to work with our suppliers to help. However, a 25%+ tariff will have tremendous impact,” Sabharwal said in an email. He worked around the single malt tariff by focusing on world whiskies from non-affected countries and importing blended malts from Scotland not subject to the tariff.
The Chinese have a saying “may you live in interesting times.” In short…buckle up. It’s about to get interesting.