The US trade war with….everywhere is hotting up, and this is no less the case when it comes to transatlantic trade relations. Come April 1 this year, in just under two weeks’ time, the European Union will apply a 50 percent tariff on American whiskey, including bourbon, in retaliation for President Donald Trump’s decision to impose 25 percent tariffs on all steel and aluminium entering the US, including from Europe.
Of course, President Trump followed up with the announcement of another set of tariffs of his own – 200 percent on European alcohol products, unless the “nasty 50% tariff on whisky” is stopped, as he put it in a post on Truth Social. “This will be great for the Wine and Champagne businesses in the US,” he said, leaving readers to speculate as to whether he knew or not that champagne only comes from France’s Champagne region.
Unless a last-minute agreement is reached, these tariffs are set to have a predictably detrimental effect in, at least, the short term on alcohol importers, retailers and consumers. There’s precedent for this very situation: in June 2018, the EU imposed a 25 percent tariff on American whiskey as part of a trade dispute with the US, which the Distilled Spirits Council says resulted in a 20 percent drop in American whiskey exports to the EU from that year through to 2021 (shortly before the tariffs were dropped as a result of negotiations with the Biden administration), which had an effect on jobs and revenues for those in the sector.
Alcohol products on both sides of the Atlantic are set to get a good deal more expensive, then. To those of us who are fond of a Jack Daniel’s or Southern Comfort and Coke (or neat if you’re much harder than me) this news comes as an immense disappointment. So what’s the damage, how much can we expect our drink of choice to cost, come April 1?
How much do they cost now?
For simplicity’s sake, we’ll limit ourselves to the standard 70cl (700ml) bottle and make use of a couple of rough averages based on their prices in a variety of Irish retailers.
How much would they cost once tariffs took effect?
Unfortunately, you can’t just figure out how much they would cost by applying a 50 percent increase to those figures. To estimate out how much these beloved American beverages would cost once the 50 percent tariff took effect, we need go back a few steps and figure out how much they cost coming in from the US, to which the tariff would then be applied, to which excise duty (around €11.92 for a 70cl bottle of whiskey) would be applied, as well as 23 percent VAT on top of all of that. To do it in another order would warp the figure.
For each of the brands listed above, that ultimately works out at:
Suffice to say, those American whiskeys and Cokes are poised to get a lot more expensive. Having forgone alcohol his whole life, President Trump is unlikely to be a loser in this particular trade war, making it much like a conventional war. The everyman like yours truly will be the one taking fire. There are no winners in trade wars.