Kansas City distillery Tom’s Town is concerned about a 25 percent tariff China is expected to set on American bourbon on Friday.
While Tom’s Town owner David Epstein said his company doesn’t sell overseas, he’s worried larger distilleries will move product intended for the overseas market to America because of the tariffs. That would drive down prices and make it harder for small distilleries to compete.
“It becomes a game that is not winnable for the small craft guys,” Epstein said. “So the corporate guys can play at that level probably for months, even years — that is not the case for the craft spirit side.”
This comes after the European Union placed a tariff on bourbon in June. The tariffs by the EU and China are a response to tariffs President Trump placed on foreign imports of aluminum and steel.
Reid Mitenbuler, author of “Bourbon Empire: The Past and Future of America's Whiskey,” said a lot of craft distillers are still trying to carve out their place in the US market so it’s not as “obvious” that craft distilleries would be affected by the tariffs.
“But it still could,” Mitenbuler said. “Because if you have a lot of distilleries that have less of a market overseas, they’re going to have more product to sell domestically. The price is going to go down, so then you could see craft distillers who are trying to compete against some of the bigger producers.”
This can spell trouble for craft distillers who have a hard time competing against cheap bourbon because they have a higher overhead, according to Mitenbuler.
Epstein said he won’t be able to lower his prices that much. However, he said he hopes the craft nature of his bourbon will help him keep his consumer base.
The tariffs come during a period of growth for the bourbon industry. Mitenbuler said distillers have invested a lot in foreign markets and bourbon is becoming more popular in European and Asian markets.
“I’m sure that whiskey will always have a market even if Europeans and the rest of the world stopped buying as much,” Bourbon Blog founder Tom Fischer said.
But Fischer added that any kind of tariffs wouldn’t be good for business.
MGP Ingredients, a supplier of distilled spirits based in Kansas, declined to be interviewed but said in a written statement that “tariffs on the exports of US spirits products would be detrimental to our industry.” The “vast majority” of MGP’s whiskey is consumed in the US, according to the statement.
Fischer says it’s too early to tell the full effect of tariffs but he hopes the government can work toward a solution.
“The less the government can interfere in taxing and tariffs, all the better,” Fischer said. “Because whether you’re in the Democrat party, the Republican party what I like to say is that we’re all part of the cocktail party.”