TARIFF C H A O S Written by STEPHEN GOULD
T
he recent trade policies of the United States, along with the associated rhetoric, have caused what can only described as chaos in the global economy. One of the many industries that has been significantly affected is the global spirits industry. This is because the United States is both the largest economy in the world and largest alcohol beverage market. As such, United States trade policies have a significantly larger impact on the distilled spirits industry globally than they might have on some other industries. In addition, the negative rhetoric coming out of Washington toward the United States’ largest trading partners has resulted in retaliatory tariffs against U.S. spirits and a variety of other non-tariff trade barriers. Among other things, American products including bourbon and other American-produced alcohol beverages are being pulled from Canadian and Mexican shelves as a result. Canada’s government has specifically called out bourbon in response to the imposition of the new U.S. tariffs and associated rhetoric. So have many others.
In short, these trade policies and related rhetoric are harming America’s brand.
President Trump has a very different view of tariffs and other non-tariff trade policies from any other U.S. president in recent history, believing that they should be used as leverage to negotiate better “deals” for the U.S. While it remains to be seen if this approach will be beneficial to the United States in the long term, what is certain is that there are short-term effects and uncertainty that is causing significant pain within the beverage alcohol industry on a global basis. Everyone’s hope is that these tariffs and other non-tariff trade barriers will be short-lived. However, the resulting chaos is severely impacting the alcohol beverage ecosystem at a time when 20
sales in the alcohol beverage industry are significantly down across all categories and tiers. As a result, businesses within the alcohol beverage ecosystem must become more proactive in managing potential supply and international trade-related risks and implement mitigation strategies when and wherever possible. A few key steps to begin doing so include:
▶ Mapping your company’s global supply chain
▶ Compiling supplier commodity data and spend by country
▶ Compiling customer commodity data and revenue by country
Once a company begins to proactively visualize and track the types of data listed above, a company can begin to assess the tariff and non-tariff costs and risks to their business in the current environment. It should be noted here that even companies that don’t import or export should do this type of analysis given the current circumstances. This is because, while your company may not be engaged in international trade, your suppliers (and customers) likely are.
and the Distilled Spirits Industry in 2025 W W W . ARTISANSPIRITMAG . C O M