Rising Bar Tabs? Scotch, Irish Whiskey Tied Up in Trade Tiff

(Bloomberg) --

Single-malt Scotch and Irish whiskey are the latest items getting ensnared in the U.S.’s trade wars.

The spirits from Scotland and Ireland are among the latest European products that President Donald Trump’s administration has proposed hitting with import duties, according to a list posted Monday by the Office of the U.S. Trade Representative. That threatens to hit industries that count American whiskey lovers as their largest foreign market.

The potential retaliatory tariffs are part of a long-running trans-Atlantic dispute over aircraft subsidies. With American corn-based bourbon already subject to a 25% tariff in the EU, the new levies in the U.S. mean that spirits fans on both side of the Atlantic could now be paying more for imported whiskey.

Americans, especially millennials, have boosted consumption of Irish and Scotch whiskey -- gains that were now threatened by tariffs, according to Michael Bilello, senior vice president of communications and marketing at the Wine and Spirits Wholesalers of America trade group, based in Washington.

“The impact of these tariffs will not discriminate –- from entry-level brands to high-end products, it will be felt,” Bilello said in an email.

Scotland shipped GBP1.04 billion ($1.31 billion) of whiskey to the U.S. last year, its highest-value export market, according to figures from the Scotch Whisky Association. North America also accounted for 45% of global sales of Irish whiskey last year, according to Ireland’s whiskey group.

“U.S. companies -- from farmers, to suppliers to retailers -- are already being negatively impacted by the imposition of retaliatory tariffs by key trading partners on certain U.S. distilled spirits resulting from other trade disputes, and these additional tariffs will only inflict further harm,” the Distilled Spirits Council of the United States said in a statement.

Since last year’s imposition of EU tariffs on U.S. whiskey, American exports to the region have dropped 18%, according to the group.

The impact at American bars ultimately depends on what level of tariffs are applied, said Maria Castroviejo, a senior analyst at Rabobank. Price increases for mainstream drinks may spur consumers to sip on a different liquor instead. More premium products, like single-malt whiskey, are already relatively expensive and may take less of a hit, she said.

--With assistance from Denitsa Tsekova.

To contact the reporters on this story: Megan Durisin in London at mdurisin1@bloomberg.net;Michael Hirtzer in Chicago at mhirtzer@bloomberg.net

To contact the editors responsible for this story: Lynn Thomasson at lthomasson@bloomberg.net, Reg Gale

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