Trade Groups Urge Talks To End Tariffs
President Trump followed through Saturday on his threat to levy 25% tariffs on all goods from Mexico and Canada, with one exception being energy imports from Canada, which will face a 10% tariff. The drinks industry had hoped to gain a carve-out from the new tariffs, but those pleas were denied. Trump also said he intends to impose tariffs on the European Union looking ahead, in another move with significant implications for imported spirits and wine. On Monday, Trump paused the tariffs on Mexico for one month after an agreement with the Mexican government.
After the announcement, Canada quickly retaliated with tariffs on U.S.-made goods, and several Canadian provinces began pulling American drinks brands off their shelves. Among them was the largest Canadian province of Ontario, which sells C$1 billion ($682m) worth of U.S. spirits, wine, and beer annually. Quebec, British Columbia, Nova Scotia, and other provinces also began barring American beverage alcohol brands.
“Canada is the single most important export market for U.S. wines with retail sales in excess of $1.1 billion annually,” said Robert Koch, president and CEO of The Wine Institute. “Wine is one of the U.S.’s most highly valued agricultural exports, so any loss of access to the Canadian market will damage the entire U.S. wine sector. We urge both governments to work together to resolve this dispute as soon as possible to minimize the economic harm.” Mexico also announced plans to retaliate against the U.S. tariffs.
“The North American spirits sector is highly interconnected,” said DISCUS, the Tequila Chamber, and Spirits Canada in a joint statement following the formal tariff announcement over the weekend. “Many companies own brands in all three countries, contributing positively to local economies. Certain spirits, such as Bourbon, Tennessee Whiskey, Tequila, and Canadian Whisky, are recognized as distinctive products and can only be produced in their designated countries. The imposition of a tariff not only negatively impacts trading partners but also harms domestic industries. We urge all parties to engage in constructive dialogue to address these concerns proactively and maintain our shared commitment to a thriving spirits industry across North America.”
Some of the U.S. spirits industry’s biggest brands are imported from Mexico and Canada. Crown Royal Canadian whisky (Diageo) as well as Tequilas Don Julio (Diageo), Patrón (Bacardi), Casamigos (Diageo), and Jose Cuervo (Proximo) all rank within the top 11 spirits labels in retail value terms in the U.S., according to Impact Databank. Additionally, Campari (Espolòn), William Grant (Milagro), and Mast-Jägermeister (Teremana) all count Tequilas as their top U.S. brands by retail value. In a research note, Jefferies estimated that 46% of Diageo’s U.S. sales are imported from Canada and Mexico, while Campari America imports about 35% of U.S. sales from those two countries, mainly due to Espolòn.
On Friday, the drinks trade coalition Toasts Not Tariffs—representing all three tiers of the drinks industry—had urged the president to exempt wine and spirits from being tariffed.
“Given the unique nature of the U.S. wine and spirits sectors, the heavy dependence of U.S. restaurants and other small businesses on the sale of these products, and the challenging U.S. marketplace, we respectfully request that wine and spirits be excluded from any new or universal tariffs,” the trade group said in a letter to the White House. “Importers, distributors, retailers—and especially restaurants—operate on razor-thin margins and rely on the profitability of alcohol sales for their survival. New tariffs on imported wine and spirits would harm, not help, American businesses, threatening the livelihood of tipped workers and small businesses across the country.”
“We estimate that a 10% tariff on imported wine and distilled spirits could result in over 38,000 American job losses across production, distribution, hospitality, and retail and nearly $3.3 billion in lost sales,” the letter added. “A 20% tariff could cost 74,000 U.S. jobs and nearly $6.2 billion in lost sales.”
Retaliatory tariffs from targeted countries are also a key concern for Toasts Not Tariffs, which said it’s “particularly concerned that the E.U. will reimpose its tariff on American Whiskeys at 50% on April 1, 2025, if there is no agreement on steel and aluminum or the E.U. does not extend the suspension of its tariff.” —Daniel Marsteller
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Tagged : Tariffs
