Booze Companies Lobbying Washington to Dump Trump-Era Tariffs

The alcohol industry has mounted a multi-pronged campaign to prod lawmakers and administration officials to reverse Trump-era trade actions they say have hammered their profits on key products like whiskey and beer.

They are seeking removal of tariffs imposed on American whiskey by the European Union and United Kingdom as part of an unrelated trade dispute. Beer brewers are also being harmed by U.S. tariffs on aluminum as cans become more popular, groups representing the sectors say.

Both the Distilled Spirits Council of the U.S. and the Beer Institute have ramped up lobbying efforts to remove these levies as the Biden administration is undertaking a review of the tariff programs.

(Photo by: Newscast/Universal Images Group via Getty Images)

The booze industry is lobbying for removal of Trump era tariffs that have affected whiskey sales.

The disputes are related to transatlantic trade cases being handled by the World Trade Organization. Some of the alcohol tariffs were imposed as part of retaliatory actions taken by the U.S. and the E.U. over subsidies given to aircraft manufacturers Boeing Co., based in the U.S., and Airbus SE, which has headquarters in France.

Although the U.S. and E.U. agreed in March to temporarily suspend the 25% tariffs on certain kinds of distilled spirits and liqueurs, the levy is set to return next month. The 25% tariff that the E.U. and U.K. have placed on American whiskeys as part of the steel and aluminum dispute remains in place.

“All of these tariffs have nothing to do with us,” said Chris Swonger, head of the Distilled Spirits Council of the U.S., an industry group whose members include the makers of Bulleit and Jim Beam. “They’re related to complex trade cases over Boeing and Airbus, and steel and aluminum. And we’re just a victim of it.”

The stiff levies are taking their toll. Lawson Whiting, president of Brown-Forman, whose brands include Jack Daniel’s, said the E.U.’s 25% tariff on whiskey has cost his company $70 million a year, according to his remarks cited in June on The Drinks Business Magazine website.

Since the tariffs were imposed in 2018, American whiskey exports to the U.K. have decreased 53%, according to the Distilled Spirits Council. Exports of American whiskey to the E.U. dropped 37%.

The group has spoken with key figures in the Office of the U.S. Trade Representative and the White House, and has received a warm reception, Swonger says.

They’ve also lobbied Capitol Hill to keep the pressure on. Sens. Tim Kaine (D-Va.) and Todd Young (R-Ind.) and Reps. John Yarmuth (D-Ky.) and Andy Barr (R-Ky.), the co-chairs of the Congressional Bourbon Caucus, have led bipartisan letters to U.S. Trade Representative Katherine Tai.

Toasts Not Tariffs

The Distilled Spirits Council has also formed a coalition with dozens of other groups called Toasts Not Tariffs, which has been sounding the alarm. “We are cautiously optimistic, and very encouraged that the Biden administration is putting the building blocks in place to ultimately resolve the tariffs on the U.S. distilled spirits industry,” Swonger said.

The White House and the Office of the U.S. Trade Representative didn’t respond to an inquiry from Bloomberg Government about the status of the tariffs.

The 10% tariffs on steel and aluminum have ensnared others in the beverage sector, including the beer industry. Although the tariffs are placed on imported aluminum, buyers of domestic aluminum also end up paying more because of how the market works, according to the Beer Institute, an industry group whose members represent a majority of the beer market.

“The aluminum tariffs, basically, are built into the cost of aluminum, whether it’s domestic aluminum or foreign aluminum,” said Jim McGreevy, the chief executive of the Beer Institute, which represents the makers of brands including Bud Light and Corona.

Aluminum Pricing

Beermakers also take issue with how the pricing of aluminum is calculated in the Midwestern states, which has compounded the hit to their industry.

“We see a direct financial impact on our industries because of the tariffs and because of the way the tariffs interact with a very opaque price setting mechanism,” McGreevy said, adding that aluminum is “the single biggest cost input into the production of beer.”

The industry group has joined together with organizations that represent other sectors that purchase aluminum, such as the American Beverage Association, the National Marine Manufacturers Association, and the Flexible Packaging Association.

Together, they’re supporting legislation (H.R. 2698) that would give Commodity Futures Trading Commission jurisdiction over the markets that set aluminum prices. S&P Global Platts has publicly pushed back on the bill, saying the government is already able to oversee these markets.

The bill, co-sponsored by Reps. Al Lawson (D-Fla.) and Ken Buck (R-Colo.), is on the hunt for more co-sponsors, said Stephanie Lambert, a Lawson spokeswoman. Lawson has pressed the House Agriculture Committee, of which he’s a member, to mark it up.

The Beer Institute has been in touch with the administration and lawmakers on the issue of tariffs and aluminum pricing.

Although it’s won advocacy battles in the recent past, such as scoring a legislative victory in permanently lowering federal excise taxes on beer, McGreevy said the increased costs of aluminum have been three times as much as they saved from lower taxes.

To contact the reporter on this story: Megan R. Wilson in Washington at mwilson@bgov.com

To contact the editors responsible for this story: Bennett Roth at broth@bgov.com; Kyle Trygstad at ktrygstad@bgov.com