Tuesday, February 25, 2020

Trump's War on Whisky Is a Dram Shame

By Eric Boehm - February 25, 2020 at 06:00AM

While the Trump administration's tariffs on steel, aluminum, and Chinese-made goods have earned most of the headlines, another more obscure set of Trump-backed import duties are hitting Americans squarely in the booze.

Since October, the U.S. has charged a new 25 percent tariff on single malt Scotch whisky, part of a broader set of levies targeting hundreds of European cultural items, including Italian pasta, German ham, and English wool. The 25 percent tariff is expected to cause scotch exports to the United States to drop by 20 percent over a year, according to the Scotch Whisky Association. "Consumer choice will diminish and Scotch whisky companies will start to lose market share," says Karen Betts, the trade group's executive director.

Practically, the tariff means that what used to be a $40 bottle of scotch is now going to set you back more than $50. Smaller distilleries will be particularly hard hit because the tariff specifically targets single malt Scotch whisky; blended varieties like those ones sold by most major brands are exempt, so those prices will remain the same. Some small-batch producers, like Fife-based Kingsbarns Distillery, are delaying plans to tap into the lucrative (and growing) U.S. market because of the new tariffs, according to Whisky Advocate, an industry publication.

Trump has repeatedly reached for tariffs—which are nothing more than taxes paid by American importers and consumers—in a misguided attempt to force other countries to negotiate trade deals with the U.S. But the scotch tariffs are somewhat separate from the current administration's myriad trade wars.

Whisky has become collateral damage in a long-running spat between the U.S. and the European Union (E.U.) over subsidies to airplane manufacturers. The World Trade Organization gave the U.S. permission to impose tariffs on some E.U. exports last year after the U.S. claimed Airbus was being unfairly subsidized by the French government. The main rival of Airbus is, of course, Washington-based Boeing, a heavy hitter in American politics that's also the recipient of generous corporate welfare.

The whole episode demonstrates the foolishness of tariffs. American consumers of whisky, wine, and wool are not subsidizing Airbus. Yet people and businesses on both sides of the Atlantic are being punished simply for trying to amicably trade what they have for what they want.

Whiskey distillers have always had to account for the "angel's share"—small amounts lost to evaporation during aging. Thanks to the Trump administration, now they have to plan for the taxman's cut too.


from Reason Magazine Articles
via IFTTT