On a soggy evening in Brussels not long ago, liquor lobbyists convened in an upscale private club. As they sipped cocktails with names like “Toasts Not Tariffs,” they worried about yet another looming crisis for their industry.
Back in the days when President Trump was leading a global trade war seven years ago, the spirits sector became an unintended casualty. In response to Trump’s tariffs targeting America’s trade partners, the European Union retaliated with its own tariffs, including a hefty 25% on American whiskey. This move was calculated to strike at Senator Mitch McConnell of Kentucky, the then-majority leader. A volley of retaliatory tariffs ensued, affecting spirits from rum to cognac on both sides of the Atlantic.
These tariffs were put on hold during Biden’s tenure, yet with Trump seeking office again, trying to reshape global trade, the alcohol industry finds itself threatened once more.
The European Union decided to put the contentious tariffs on hold in 2021 and recommitted to this in 2023, but this reprieve only lasts until March 31. After that, tariffs on American whiskey are set to soar to 50%, alongside hikes on other goods, including motorcycles.
The spirits industry has been particularly vocal about the dangers these tariffs present. Industry leaders and craft distillers fear the taxes could decimate their export markets, particularly in places like Germany and France, potentially sparking retaliatory tariffs on other alcoholic beverages.
In a bid to get ahead of potential trouble, bars have been stockpiling bottles, distilleries are freezing plans for overseas ventures, and industry leaders are crisscrossing Brussels, Washington, and Rome. Their hope? To convince decision-makers, like Italy’s Prime Minister Giorgia Meloni, who has been a key U.S. ally in Europe, to take steps that could stave off the pain looming from these tariffs.
Interestingly, there might be strategic motivations behind involving the liquor sector in trade talks. Whiskey, symbolizing more than just rich amber liquid, highlights the real pain and dynamics of trade wars.
Consumer product tariffs, such as those on bourbon, grab media attention and disproportionately impact certain regions, inflicting notable political damage without a substantial economic outlay. With the European Union’s whiskey tariffs poised to kick in automatically soon, they present an opportunity for Europe to pressure the U.S. without needing to forge new political agreements or heighten trade tensions drastically.
Currently, European leaders are angling for any leverage they can muster.
The 27-member bloc is eager to avoid a full-blown trade war with the United States. Such a clash would be particularly harmful, given Europe’s sluggish economic growth, and the continent’s leaders are keen to maintain U.S. cooperation on pressing issues like aiding Ukraine against Russia.
The European Union has yet to outline its response to new tariffs imposed by the Trump administration, including fresh 25% tariffs on steel and aluminum announced earlier, set to start on March 12. As President Trump directed his team to draft new tariff levels for major economies, including the EU, it’s likely to spark intense global negotiations.
While EU officials weigh their options, the alcohol industry watches closely to see if whiskey tariffs will be upheld or increased.
“This sector shouldn’t be dragged into a trade conflict,” remarked Chris R. Swonger, CEO of the Distilled Spirits Council of the United States, who recently met with European leaders in Italy and Belgium. “We symbolize the best of free trade.”
The impact of concoctions getting caught in tariff negotiations isn’t just limited to Europe. Mexican tequila and Canadian whiskey could also be drawn into the mix as the U.S. re-evaluates its trade agreements with Mexico and Canada, although tariffs with those countries are currently on pause until March.
Against this delicate backdrop, global industry lobby groups are uniting to argue that the spirits sector should be exempt from tariff battles. This would let emerging distillers carve a niche in new markets and help multinational alcohol producers continue trading seamlessly, particularly with the U.S. and EU.
American whiskey exports to the EU dipped by 20% the year after initial 25% tariffs took effect, industry figures show. EU exports of liqueurs and cordials also plunged substantially.
The financial hit was relatively minor—whiskey sales plummeted by over $100 million between 2018 and 2019, a mere blip in the nearly $22 trillion U.S. economy back then. Yet the upheaval has lingered, hampering the industry’s growth prospects even now.
Victor Yarbrough, CEO of Brough Brothers Spirits Group, began exporting bourbon from Kentucky to Britain in 2019, right when the first tariffs took hold. His company had to scale back because the 25% tariff made exports unprofitable.
Now, he’s having to delay his plans to enter the French and German markets, which he once hoped to achieve by summer.
“It’s incredibly challenging to make any business decisions,” Yarbrough shared.
His lineup includes a cherry and chocolate-flavored bourbon for connoisseurs and a lower-proof variant with apple notes, which he hoped would thrive in Europe. But for now, he’ll have to wait to make that discovery.
Yarbrough’s challenges are a snapshot of how trade disputes can hurt U.S. enterprises. Whiskey stands out as America’s top spirits export, making up more than two-thirds of overseas distilled spirits sales in 2022 and 2023.
But these tit-for-tat tariffs come with costs for consumers, including higher prices. In Hamburg, Germany, Björn Lahmann, who runs Whiskyplaza with an impressive 1,000 open bottles at an 18th-century bar, relies heavily on American selections for timeless cocktails like the Sazerac and Old Fashioned.
If bourbon and rye prices climb too high, Lahmann notes, patrons may have to either pay more or switch to non-American alternatives.
The argument that tariffs negatively impact all parties is a key talking point for the European Union.
“Tariffs are taxes—they’re bad for business and worse for consumers,” stated Ursula von der Leyen, president of the European Commission, the EU’s executive body, in a recent announcement.
Europe’s approach to dealing with the United States has been to maintain this narrative while also seeking negotiation. Its leaders are tempting the U.S. administration with concessions, like increased gas purchases, which have been a presidential demand. But they’ve also promised robust countermeasures if talks fall through—targeted tariffs could be in play. Lobbyists keenly await the precise details, but European leaders have yet to disclose specifics.
“We don’t know,” said Ulrich Adam, director general of Spirits Europe, the regional liquor lobby group. “On the topic of spirits, we’re united: we strive for tariff-free trade.”
