While U.S. distillers are confronting the COVID-19 pandemic, they're also still dealing with the impact of the trade war with Europe that has been going on for two years.

According to the industry trade group Distilled Spirits Council of the U.S. (DISCUS), the retaliatory tariffs imposed by the European Union in response to aluminum and steel duties imposed by President Donald Trump in June 2018 have cost distillers $337 million in sales.

Glass of whiskey on a barrel

Image source: Getty Images.

Whiskey river running dry

According to DISCUS, American whiskey exports to the EU were $501 million in April, the latest data available. That's down $256 million from where they stood two years ago, before the tariffs went into effect, but it's 40% below the $858 million sales were projected to reach.

The EU represented 52% of total American whiskey exports in 2019.

Distillers like Brown-Forman (NYSE:BF.A)(NYSE:BF.B) have lapped the initial impact of the start of the trade war so that earlier this year, even though its business is still impacted by the higher tariffs, the effects are lessened.

The Jack Daniel's maker, which was the primary target of the higher EU whiskey tariffs, said margins had been compressed by 200 basis points in the first two quarters of its fiscal year due to the tariffs, but by the end of the third quarter that was reduced to 100 basis points.

Still, DISCUS says American whiskey sales had grown for 21 straight years between 1997 and 2018, and would have continued growing and increasing its market share were it not for the trade dispute.

Now that distillers like Brown-Forman are also hobbled by the COVID-19 outbreak, DISCUS says distillers need relief.

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