Please ensure Javascript is enabled for purposes of website accessibility

U.S. Whiskey Makers Lose $337M to Trade War

By Rich Duprey – Jun 23, 2020 at 10:39AM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

There's still a trade battle being fought in Europe.

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 (BF.A -1.04%) (BF.B -1.23%) 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.

Rich Duprey has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Brown-Forman Corporation Stock Quote
Brown-Forman Corporation
$66.57 (-1.23%) $0.83
Brown-Forman Corporation Stock Quote
Brown-Forman Corporation
$67.56 (-1.04%) $0.71

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 10/02/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.