Liquor sales have fallen since peaking during the Covid pandemic. Economic uncertainty and persistent inflation have led consumers to reduce their spending, and now tariffs have become yet another challenge looming over the liquor industry.
Since the Trump administration announced increased tariffs on all foreign-made goods imported into the U.S., a global retaliation battle has emerged.
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While President Donald Trump issued several 90-day tariff pauses in an attempt to negotiate with foreign governments, many have yet to come to lasting mutual agreements.
After multiple delays, global tariffs officially took effect on Aug. 7. Depending on the country of origin, they range from 10% to 50%.
Related: Consumers fear rising prices, product shortages as tariffs loom
This major shift has derailed many industries, particularly those that rely heavily on foreign goods, as tariff implementations threaten to disrupt the supply chain, increase manufacturing costs across all areas, and lead to price hikes.
While companies have been strategizing and reorganizing their businesses, hoping to soften or prevent the potential blow tariffs might have on their finances, many remain concerned about negative financial repercussions.
How new U.S. tariffs are impacting the liquor industry
The liquor industry is among those most vulnerable. Although some progress has been made, like the recent trade deal between the U.S. and the EU that set a 15% tariff on most EU exports to the U.S., the lack of binding agreements leaves room for future changes and potential disputes.
The EU remains a critical market for U.S. liquor. According to the Distilled Spirits Council of the U.S., the EU is the largest export market for U.S. spirits, with around 50% of all U.S. liquor exported to the EU, accounting for $1.2 billion in 2024.
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Overall, U.S. liquor exports reached a record $2.4 billion in 2024, up nearly 10% compared to 2023. This was primarily driven by a 39% increase in exports to the EU, which had temporarily lifted liquor tariffs.
However, past retaliation tariffs have shown how damaging these disputes can be.
Why trade agreements are crucial for U.S. liquor export growth
Between 2018 and 2021, total U.S. liquor exports decreased by 12%, with American whiskey down 18%. Once tariffs were suspended in 2022, American Whiskey exports to the EU increased nearly 60%, reaching $699 million in 2024.
“Growth of U.S. spirits exports is due, in large part, to the U.S. spirits sector having a fair and reciprocal playing field with 51 countries that have provided tariff-free access for U.S. spirits, including the EU, Canada, Mexico, Japan and many others,” said the Distilled Spirits Council of the U.S.
Even industry leaders like Diageo (DEO) are not immune. Following the announcement of the new tariffs, Diageo stated it took steps to adjust pricing, reanalyze promotional and inventory management strategies, optimize the supply chain, and relocate investments.
Despite all efforts, the spirits company still warned that U.S. import tariffs could have an annual financial impact of around $150 million on its business.
Looking ahead, the liquor industry's long-term growth depends on securing a return to zero-for-zero spirits tariffs with the existing 51 trade partners and creating new market agreements with countries that impose high tariffs on liquor, such as India, Vietnam, and South Africa.
Related: Diageo: Tariffs will make whiskey and beer prices higher
