Collage showing former US President Donald Trump and whisky being poured into a glass. For representational purposes.
Credit: iStock Photo
When you’re in the whisky business, you’re always making predictions about the future.
From the time grain grown around the Midwest enters Sonat Birnecker Hart’s distillery on the North Side of Chicago, it will be four to 10 years before the whisky is shipped to buyers. So running her business requires careful projections about demand.
Those calculations have become harder of late. With the US presidential election looming, many businesses around the world are facing uncertainty about the future of American trade policy and the tariffs that products will face in global markets.
For the whisky industry, the stakes are particularly high. In March, a 50 per cent tariff on American whisky exports to Europe will snap into effect unless the European Union and the United States can come to an agreement to stop the levies.
The outcome may depend on who is in office. Both former President Donald Trump and Vice President Kamala Harris have embraced tariffs, but their plans differ significantly. Harris’ campaign has said she would use tariffs in a “targeted” fashion — possibly mirroring the approach of President Joe Biden, who recently imposed tariffs on Chinese electric vehicles, silicon chips and solar panels. Like Biden, she has emphasized working closely with allies.
Trump, in contrast, has said his approach to trade would be even more aggressive than the trade wars of his first term, when he imposed stiff tariffs on allies and rivals to obtain concessions and try to bolster American manufacturing. He has proposed a 60 per cent tariff on products from China and a tariff of more than 10 per cent on other goods from around the world.
“Under my plan, American workers will no longer be worried about losing your jobs to foreign nations. Instead, foreign nations will be worried about losing their jobs to America,” Trump said in Georgia last week, as he threatened to put 100 per cent tariffs on every car coming over the US border from Mexico.
“The word tariff properly used is a beautiful word,” he added.
The remnants of Trump’s first trade war continue to reverberate across the globe.
The European Union imposed tariffs on American whisky in 2018 after Trump put a tax on steel and aluminum imports from Europe. The Biden administration reached an agreement with EU officials to pause the tariff, but that suspension will expire next year.
In 2026, a separate set of tariffs that the European Union, Britain and the United States imposed on one another’s spirits as a result of a different trade spat over airplanes is also set to snap back into effect, unless an agreement is struck.
Chris R. Swonger, the president of the Distilled Spirits Council of the United States, a trade group, said the industry expected Trump to aggressively use tariffs if reelected. He said some craft distillers, facing the prospect of new trade battles, were holding off on investing in expanding in Europe. “That may be a bad investment for that small business,” he said.
Foreign governments have also been quietly trying to shield themselves against the trade disruption that could come with a return to Trump’s “America First” policies. In Washington, dignitaries have been expanding their contacts among both Trump’s and Harris’ advisers, and emphasizing their strategic and economic partnerships with the United States.
In a report published last week about the views of foreign governments on the presidential election, experts at the Center for Strategic and International Studies, a Washington think tank, said governments in Canada, Mexico, Japan, South Korea, China and the European Union all shared concerns about higher tariffs under a second Trump presidency.
“As Americans go to the polls, their choices have ramifications for the world,” Victor Cha, the center’s senior vice president for Asia, said at an event marking the report’s release.
Officials in Canada and Mexico are particularly wary, the report said, given that an agreement that covers North American trade is scheduled for a review in 2026. While both Harris and Trump are likely to try to change certain aspects of the deal, foreign officials believe a renegotiation under Trump could be much more contentious and include large tariffs.
Sen. JD Vance of Ohio, the Republican vice presidential candidate, said during a debate Tuesday that the “heart” of Trump’s economic plan was putting tariffs on foreign countries and businesses that moved jobs overseas, and using that money to cut taxes and provide services like child care.
He also argued that Trump had made the world a more stable place by inspiring fear in other governments. “People were afraid of stepping out of line,” he said.
David Page, the head of macro research at AXA Investment Managers, who is based in Britain, said he had seen “immense interest” among clients in the US election and its spillover effects on the rest of the world.
Page said he was telling clients that, while Harris might introduce some tariffs and sanctions, the large tariffs that Trump was discussing were “a totally different ballgame.” While investment was strong in the first half of the year, Page said, he expects it to soften in the third quarter because businesses are uncertain how policies would affect their businesses.
“I think it is having quite a material effect on all levels of government and within companies as well,” he said.
Trump’s current tariff proposals are orders of magnitude larger than the actions he took in his first term, when he levied tariffs on foreign metals, washing machines, solar panels and a variety of goods from China. Foreign governments retaliated with their own levies on American corn, motorcycles, orange juice and other goods, lowering US exports.
US soybean exports plummeted 75 per cent year over year after one such retaliatory tariff from China, while American whisky exports dropped 30 per cent after Europe imposed a 25 per cent tariff on the liquor.
Trump’s former advisers have said they expect him to follow through on aggressive promises he has made on the campaign trail.
“I think his trade policies would be very similar to what they were before, namely, being very aggressive to try to reduce the inequities that have sprung up,” Wilbur Ross, who served as Trump’s commerce secretary, said in an interview.
Ross said a second Trump administration would also probably push for “wholesale reforms” at the World Trade Organization, and try to crack down on imports of any Chinese products, like electric vehicles, coming through Mexico, by reopening negotiations over the North American trade deal completed in Trump’s first term.
Clete Willems, a partner at the law firm Akin Gump who was an adviser in the Trump administration, said Trump was also likely to take a tough position on restricting US technology exports to China.
“I do think the Biden administration as a general rule is very concerned about doing anything that would create any tension in the relationship, and I think that has held them back from taking some of these actions,” Willems said. “I don’t think the Trump administration would be quite as worried about that.”