If you’re interested in a great, well-stated overview of tariffs, check this out. While they are meant to protect domestic production, they don’t typically come without collateral damage, often to a different industry and almost always, small businesses and the consumer.
For the wine collector
In recent years we’ve heard a lot about how tariffs impacted the wine industry, with imports of wine from French and Spanish wine down 50% or more. In early 2021, President Biden put a four-month pause on the tariffs imposed by the Trump administration beginning in October 2019. Of course, these tariffs included 25% on French and German wine. For the next few months, consumers can sip a little easier. Important to keep in mind that the pause will last four months and it is unknown if an agreement between the governments can be reached in that time. But a wine lover can hope, right?
For the bourbon collector
Now that there is some relief on the wine front, our bourbon and whisky-producing friends are still feeling the strain. The current pause leaves a situation in which some European spirits can be imported duty-free, but the tariffs are still in force for American whiskey producers. The tariffs imposed on Kentucky Bourbon makers resulted in 35% drop in exports during 2020, according to the Kentucky Distillers Association.
Overproduction in the 1960s left the industry with a lot of unsold bourbon. This led the industry to make pricing decisions that left bourbon tainted as a cheap bottle. Not the kind of spirit refined consumers were interested in buying or drinking. This poor perception of bourbon along with tariffs in the 1970s stunted the ability of American distillers to convert scotch and whisky drinkers in Europe. Now after decades of hard work, exceptional products, and success in turning that around, tariffs loom large over the near future.
For the collector, you will continue to see more Bourbon and American Whiskey on the market because less is being exported. Hopefully, the dispute can be resolved during the four-month pause.