Wednesday, June 13, 2018

Tariff Retaliation Looms on the Horizon

     The United States brought in tariffs on 1 June, levying a 25% import duty on steel and a 10% on Aluminum brought into the United States.  Many nations throughout the world accused the US of protectionism.  On Wednesday (6 June), the European Commission will be introducing tariffs on US goods ranging from Bourbon to motorcycles, including a 25% tariff on American whiskey as soon as July 20th.The 25% tariff on American whiskey could be imposed as early as 20 July.  June 5th, Mexico imposed a 25% tariff on Bourbon on July 1, Canada proposed 10% retaliatory tariffs.   Turkey has also proposed a 40% tariff on all US distilled spirits, set to come into force on 21 June.  China has already announced that it will hit American Imports of Whiskey with a 25% tariff whiskey in response to punitive US measures.
     In a letter to commerce secretary Wilbur Ross, the Distilled Spirits Council said it is “extremely concerned about the increasing likelihood” that the EU, Canada, Turkey and China will go through with previously stated trade threats.  The group said that US spirits exports are worth an estimated $759 million to these markets. If imposed, tariffs “would severely harm” producers, farmers, distribution, logistic providers and packaging suppliers.   Distilled Spirits Council said that around 65% of global US whiskey exports are also at risk of retaliatory tariffs.   Retaliatory tariffs could “seriously impede the export process that has benefited our sector”, the Distilled Spirits Council said.
     The Spirits industry in general could take a huge hit if these retaliatory tariffs are imposed.  The nation needs to keep on top of this issue and do what is necessary to prevent this political move that was proven that protectionism doesn’t work back in the 1920’s and 30’s.  American leaders imposed dramatically high tariffs before with an infamous act of Congress passed in 1930, the Smoot-Hawley Tariff Act. In the late 1920’s, more than a thousand economists warned American leaders against hiking tariffs on more than 20,000 imported goods to as much as 60%.  Remember this was a part of the beginning of the Great Depression.  We don’t need to repeat history again.