US trade war with China spreads to spirits

By Beth Newhart contact

- Last updated on GMT

95% of the world’s bourbon is produced in Kentucky and world-famous American whiskey brand Jack Daniels is produced in Tennessee. Pic: ©GettyImages/kellyvandellen
95% of the world’s bourbon is produced in Kentucky and world-famous American whiskey brand Jack Daniels is produced in Tennessee. Pic: ©GettyImages/kellyvandellen

Related tags: Trade, Whisky, China

With China imposing a 25% tariff on US whiskey products, the US spirits sector fears tariffs could hamper their 'export success story'.

The US and China have been engaged in an escalating trade war over the last few weeks. After President Donald Trump placed a 25% tariff on $34bn worth of Chinese products on July 6, China responded with tariffs of their own on US products of equal value.

On July 10, Trump announced the next round of tariffs would be 10% on $200bn worth of Chinese goods, although this won’t take effect until after a two-month review process. The back-and-forth is expected to continue, with the battle taken to the World Trade Organization this week.

The 25% tariff on US whiskey is hitting hard in an industry that’s seen nearly 1200% growth in exports over the last 17 years. According to the Distilled Spirits Council, American spirits exports to China were at $959,000 in 2001 and at $12.8m in 2017, $8.9m of which was whiskey.

Speaking as China imposed its tariffs on US whiskey products earlier this month, Christine LoCascio, senior vice president of international trade at Distilled Spirits Council, said: “We hope the United States and China can soon resolve their differences so that US whiskey exports to China will no longer be subject to the 25% tariff, which will harm Chinese consumers, its hospitality sector, US whiskey exporters and the US farmers that supply them.”

US states Kentucky and Tennessee will be affected the most, as 95% of the world’s bourbon is produced in Kentucky and world-famous American whiskey brand Jack Daniels is produced in Tennessee.

China appears to be targeting​ industries and locations that have backed Trump in the past. Both Kentucky and Tennessee supported Trump’s campaign for president in 2016, and the largely-conservative dairy and agriculture industries are also struggling with the new tariffs.

“Chinese consumers, like others around the globe, are clearly finding favor with the flavor, heritage and mixability of American Whiskey. It would be a shame to punish those consumers, along with the Chinese hospitality sector, as an unintended consequence of this trade dispute,”​ LoCascio said.

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