Whiskey trade on the rocks
Tariffs corking distilleries’ exports
By Sean Horgan Staff Writer
February 17, 2019
The U.S. trade dustups with China, Canada and Europe have been viewed through the prism of domestic industries hammered by retaliatory tariffs, from Midwest soybean farmers to wholesale lobster exporters here in America’s Oldest Seaport.
American distillers of whiskey and other spirits also are on that list, as increasing tariffs threaten to stall international growth and shut U.S. spirits producers out of foreign consumer markets in Asia, Europe and North America.
Fortunately for Bob Ryan, Gloucester-based Ryan & Wood Distilleries has dodged that particular economic bullet because Ryan & Wood only sells its line of spirits within Massachusetts.
Sometimes smaller is better.
“The direct impact on us has been zero,” said Ryan, one of the founders of the Cape Ann distillery that produces Beauport Vodka, Knockabout Gin, Folly Cove Rum and rye and wheat whiskeys at its manufacturing plant in the Blackburn Industrial Park. “But these tariffs don’t really help anybody. History has shown that.”
Ryan need but look at his larger, internationally aggressive spirit-producing contemporaries to see the level of economic pain being caused by escalating trade friction between the U.S. and other countries. U.S. spirits producers now face a 25 percent tariff on shipments of whiskey and other spirits to the European Union and 10 percent on exports to Canada.
“U.S. spirits have been a target of the trade wars — with American whiskey the only U.S. agricultural product subject to retaliatory tariffs by all of the retaliating trade partners,” Christine LoCascio, Distilled Spirits Council senior vice president for international affairs, said in a statement. “Open markets created by trade agreements have greatly benefited the U.S. spirits industry, American farmers and our consumers. We urge continued dialogue with Mexico and Canada to secure the prompt removal of the retaliatory tariffs.”
The U.S. decision last year to impose higher tariffs on $250 billion worth of Chinese goods was met with a retaliatory trade strike by China resulting in higher tariffs on $763 million in spirits coming from the United States, the New York Times reported.
And on March 2, barring an extension by President Donald Trump or an agreement between trade delegates, the U.S. plans to raise tariffs to 25 percent, from the current 10 percent, on another $200 billion worth of Chinese goods, juicing trade tensions and further raising the price of doing business in China.
“I know the large producers in Louisville and Tennessee have inventory backing up on them,” Ryan said. “More tariffs will only make matters worse.”