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Trump's Trade War Leaves American Whiskey on the Rocks



When President Trump's global trade war is approaching a central moment, the US industry is trying to use Mr. Trump's love of great economic figures to get him up.

Mr. Trump faces a number of decisions over the next few weeks to obtain tariffs on Chinese goods, impose new charges on foreign car imports, and keep metal prices on trading partners such as Canada and Mexico. While Mr. Trump's economic Northwest has long reduced the trade gap between what America exports and what it imports, soybean industry industries are trying to convince Mr. Trump that his policies have the opposite effect ̵

1; by dampening exports of some of America's most beloved products.

On Tuesday, the American spirit industry, along with the growing choir of corporations and trading groups, attempted to get Mr. Trump to clear tariffs on Chinese goods and foreign metals by showing the economic pain that the commercial war has inflicted.

Since the Trump administration started tariffs last year on foreign steel and aluminum, exports of US $ 763 million have been subject to retaliatory tariffs, according to data provided by the Distilled Spirits Council, an industrial group. The most draconian tasks have come from Europe, where the price of American whiskey is 25 percent.

"The market is on the edge of its seat," says Chris R. Swonger, CEO of an interview on Tuesday. "We hope that the Trump administration can land the aircraft on these major trade deals."

Herr. Trump's tariffs have required tariffs on a number of US businesses by increasing the cost of imported goods and creating new trade barriers such as Europe, China, Canada and Mexico reciprocate with tariffs and reduced market access. The financial markets have shown signs of optimism or pessimism about trade disputes, and economists have blamed the tariff policies for contributing to weaker economic growth and reduced business understanding.

The data industry shows that the trade war stops exports at a moment when thirst for products like American whiskey surges around the world. After Canada imposed a 10 percent tariff on US whiskey on July 1, exports from US distillers increased from a 12.4 percent growth in the first half of the year to an 8.3 percent decline after tariffs were in place.

Global exports of American whiskey in the first half of 2018 increased by 28 percent from the same period in 2017. Shortly after Trump's tariffs came into force, these sales were reduced and decreased by 8.2 percent between July and November compared to the same period in previous years.

Mr. Swonger said that the measurement of spirits such as whiskey is not random. In addition to being a classic American product, bourbon has a manufacturing hub in Kentucky, a politically important state that supports Mr. Trump and is home to Senator Mitch McConnell, the Republican majority leader.

Retaliatory tariffs have affected the industry in various ways. Big creators like Beam Suntory came in front of the tariffs by quickly exporting large quantities of their whiskey, delaying some lost sales and price increases. But smaller boat shippers who lacked the capacity to produce enough whiskey to do so had to dramatically slow their expansion plans.

Scott Harris, founder of the Catoctin Creek Distillery in Virginia, said on Tuesday that he had projected a quarter of the company's revenue from Europe last year. Because of the tariffs, sales where there was little and plans to expand were frozen. Now he fears that European customers will develop a taste for other spirits, such as German whiskey.

"When this market is gone, it's hard to get back to it," Harris said. "We are currently drawing water."

The alcohol industry has been harmed by retaliatory tariffs imposed on China after the US imposed $ 250 billion in Chinese goods. It has also suffered from retaliatory tariffs Canada and Mexico put in place in response to Mr. Trump's tariffs on steel and aluminum imports. The tariffs have made American spirits more expensive compared to domestic alternatives in these countries, leading to a fall in demand.

The tariffs have also damaged companies that supply the alcohol industry. Mr. Harris said that when his business gets a contract, it increases other businesses, such as the farms that supply the ingredients needed to produce whiskey, rye and gin.

The United States has attempted to reach an agreement with China to settle its trade battle before March 2, when tariffs of $ 200 billion of Chinese goods are set to increase to 25 percent from 10 percent. On Tuesday, Trump suggested he could be willing to extend the deadline to complete a trade pact if the negotiations went well. A delegation of senior management officials is in Beijing this week trying to eradicate the remaining differences.

The fate of the metal tariff is less clear. The US has not lifted these fees as part of its new trade agreement with Canada and Mexico, but several lawmakers, including Republican Senators, say they will not take over the agreement unless the administration takes the fees on those trading partners.

"We are caught in the midst of trade disputes that have to do with the steel industry, which has nothing to do with us," said Christine LoCascio, Distilled Spirit's senior vice president of international trade.

The administration is facing a deadline this month to submit a report to Mr. Trump on whether or not importing foreign cars poses a threat to national security. The Department of Commerce is expected to submit a report during the week describing options to protect the US automotive industry, including tariffs or quotas to limit the inflow of foreign cars.

Although the fuel industry cannot be directly affected by car prices, the Trump administration has offered subsidies to farmers affected by tariffs, but has not extended its aid to any other industry. And even the ones offered have been limited and delayed by the monthly government shutdown.

Economists at the Non-Partial Congress Budget Office estimated that the administration's trade policy would shave an average of 0.1 percentage points per year of economic growth over the next decade. 19659002] Trade has become the biggest problem for the spirit industry, and Mr. Swonger has soaked Washington to invoke the Treasury Department, Commerce Department, and the Office of the United States Trade Representative. He said members of the administration seemed sympathetic to concerns about the long-term consequences of the charges, but that it was not clear that Mr. Trump was ready to stand up.

Trump administration managers have argued that, despite the wars over trade, most of the country has been unharmed, and businesses continue to benefit from lower taxes and strong economic growth.

For spirits, slower exports do not stop the industry from a thriving year, thanks to the strong US economy. Revenue across the sector increased by 5.1 percent to a record $ 27.5 billion in 2018, with the sale of the most expensive liquids growing the fastest.

This year, the Distilled Spirits Council arranged its annual financial briefing in a gleaming Manhattan skyscraper overlooking the East River. Bloody Marys with top shelf vodka were on print.

"Consumers drink and drink better," said Mr. Swonger.


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