Over the last few weeks, President Trump has ignited a modern Whiskey Rebellion after revealing his interest in placing a tariff on foreign-made steel. In response to Trump’s protectionist threat, the European Union announced that (if Trump’s plan were enacted) they would respond with a series of tariffs of their own — including adding a new tax on American bourbon.
To say the least, a trade war like this would not benefit the United States or Europe.
While some in the Trump administration may hold out hope that the US steel industry would boom from such an arrangement, the reality is that this tariff would significantly increase the cost of doing business for a wide range of American industries. And remember, if American auto manufacturers have to shell out more money in order to obtain steel, consumers will be on the hook for that added cost when they purchase their next vehicle.
The EU’s threat of retaliation to this economy-sapping tariff should also not be taken lightly. As The New York Times noted:
[A] punitive tariff on bourbon and other American whiskeys would be both a symbolic and a substantive body blow — a strike at a unique American product that is enormously popular overseas. Should the tariff dominoes fall, it will be a case study in the shortsightedness of a supposedly “America first” trade policy that, in the end, hurts Americans the most
In rural Lynchburg, Tenn., the Jack Daniel Distillery is undergoing a $140 million expansion, likewise made possible in part by its explosive growth overseas, where it sells 65 percent of its output. Needless to say, a retaliatory tariff on whiskey would put those plans, and the many Lynchburg jobs that rely on them, at risk.
American whiskey production has enjoyed a huge boom in recent years in large part due to explosive sales growth overseas. According to USA Today, the Kentucky spirits industry, “employs nearly 17,500 people and pours $8.5 billion into the Kentucky economy each year.” Kentucky liquor is also enjoyed in “more than 125 countries.” How would a retaliatory tax against bourbon benefit residents of Kentucky, a state where there are more whiskey barrels than people?
The only reason I can think of for why the Trump administration would support such a backwards policy is they are colluding with Russia’s vodka industry to kneecap bourbon! (That’s a joke, CNN. Calm down.)
As President Trump weighs the impact of protectionist tariffs against other nations, it’s important the administration considers the ripple effects that such policies would have. America’s whiskey industry should not be collateral damage in a misguided attempt to prop up US steel.
Instead of pursuing targeted tariffs in the hopes of benefiting one domestic industry, the Trump administration should focus on policies that will lift every sector of our economy, such as monetary reform and tax cuts. President Trump, don’t let the EU say “last call” to America’s bourbon boom.