LONDON (Reuters) – From Negroni cocktails to Scotch whisky, costs will rise, sales will fall, jobs will be cut, and drinks brands will disappear from U.S. bar menus as a result of President Donald Trump’s reciprocal tariffs, industry bodies said on Thursday.
Trump set out the latest round of U.S. tariffs on Wednesday, upending a globalised trade system and adding to the stress on the world economy, including on the alcohol sector and its biggest players, such as Diageo and Heineken.
In addition to global levies, Trump announced a 25% tariff on beer imports, as well as higher tariffs for EU imports to the U.S., and the alcohol sector is further hit by the inclusion of empty beer cans in existing aluminium tariffs.
Compounding the problem, many categories of drinks have to be made in specific countries or regions so manufacturers cannot dodge tariffs by shifting production to the United States.
Edward Mundy, analyst at Jefferies, noted the worst threats of a 200% tariff on European alcohol and 25% tariffs affecting Mexican tequila and Canadian whisky had not materialised. Spirits stocks opened flat or even positive on Thursday.
But industry bodies said the levies laid out on Wednesday were already enough to inflict major damage.
U.S. sales of French wine and spirits would slide by at least 20%, one group said, while Italian trade association Federvini said it was bracing to relive the “economic trauma” caused by tariffs in Trump’s first term, when exports fell by 50%.
“Many labels, which cannot be replaced by local production, will disappear from the tables of U.S. consumers, while a serious production and employment crisis is looming in Italy and Europe,” Federvini President Micaela Pallini said in a statement.
Diageo, Heineken and other major spirits and beer producers either declined to comment or did not immediately respond to Reuters’ requests.
Chris Swonger, president and CEO of the Distilled Spirits Council of the United States, said the spirits industry has enjoyed zero for zero tariffs largely for decades and needed to be disentangled from the trade problems Trump wanted to solve.
(Reporting by Emma Rumney in London, Elisa Anzolin in Milan and Dominique Patton and Tassilo Hummel in Paris; editing by Barbara Lewis)
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