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AMERICAN WHISKEY PRODUCERS CAUGHT IN THE US-CHINA TARIFFS TIT-FOR-TAT

By David Ma

20-6-2018




American whiskey producers are joining Californian wine makers to become victims of the escalating trade war between USA and China, only to find out that they may also be targeted by the European Union, Canada, Mexico and even Turkey.

The Trump administration announced last Friday that it would go ahead with 25 percent tariffs on USD50 billion worth of Chinese goods, most of which will become effective on 6 July.

China responded promptly by announcing it will retaliate by imposing tariffs on US imported goods of similar value, among them is American whiskey.

In an attempt to strike back at Trump’s tariffs on steel and aluminium exports to the US, Mexico has already imposed 25 percent tariffs on some American goods including Bourbon Whiskey.

The European Union is preparing to implement more than USD3 billion in tariffs on American goods, while Canada and Turkey could soon follow suit.

The series of retaliatory tariffs on American whiskey could hurt business after years of booming growth abroad, according to the Distilled Spirits Council of the United State.

Council data showed that American whiskey exports are up more than 20 percent year to date from last year. “Whiskey is a great American export story and we don’t want to see that disrupted,” said Clarkson Hine, interim president and CEO for the Distilled Spirits Council.

The European Union, in particular, has been a strong export market for American whiskey, in part because US and France have been mutually duty-free since 1997. US bourbon sold in France is taxed the same as spirits that are distilled locally there.

Total US spirits exports to the EU last year were valued at USD789 million; 85 percent of that was American whiskey, according to the Distilled Spirits Council.

By comparison, American spirit exports to China have grown from less than UISD1 million in 2001, when China joined the World Trade Organization, to USD12.8 million last year.

The Distilled Spirits Council earlier sent a letter to Commerce Secretary Wilbur Ross, outlining the industry’s concerns about the tariffs and calling on the administration to “find effective solutions to address US trade policy concerns, without harming the US distilled spirits sector in the process.”

The Commerce Department has responded and the two sides are expecting to meet soon.

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