How Will Alcohol Tariffs Effect U.S. Businesses?
The proposed reinstatement of Trump-era tariffs on imported alcohol products is once again looming over the beverage industry. The effect of tariffs on alcohol is not merely academic; it has direct and immediate implications for liquor store owners, bar operators, and alcohol distributors. In this article, we explore the scope of the proposed tariffs, assess the likely industry impact, and offer actionable strategies for navigating the disruption.
What Are the Proposed Tariffs?
Former President Donald Trump has indicated that if re-elected in 2024, his administration would move to impose broad tariffs on foreign goods, including alcohol. These proposals reflect similar policies from his previous administration, including:
- Tariffs of up to 25% on French and German wines
- 25% duties on single-malt Scotch whisky
- Tariffs on Irish whiskey and liqueurs from Germany, Ireland, Italy, and the UK
- Potential retaliation against EU subsidies to Airbus (USTR.gov)
While not yet reinstated, these tariffs have been positioned as a way to boost domestic manufacturing and correct trade imbalances. However, for the alcohol industry, they threaten widespread disruption.
Historical Impact: Lessons from 2019–2021
The last round of tariffs from the Trump administration caused significant strain on importers, retailers, and hospitality businesses.
“The U.S. tariffs on Scotch whisky have led to a 35% drop in exports to the U.S. since October 2019,” according to the Scotch Whisky Association.
Similar outcomes were seen across categories:
- Price increases of 10–30% on premium imports
- Delayed shipments and backorders due to customs processing
- Substitution by consumers toward domestic or non-tariffed alternatives
The effect of tariffs on alcohol was a spike in operational uncertainty, with many small and mid-size businesses absorbing losses to retain market share.
Who Will Be Affected?
Although the proposed tariffs target imports, the impact will be felt across the entire supply chain:
1. Liquor Store Owners
- Higher wholesale costs for popular imported brands
- Pressure to explain price hikes to value-conscious customers
- Reduced sales volumes or trade-down behavior
2. Bar and Restaurant Operators
- Menu redesigns to substitute tariffed items
- Tighter profit margins as pour costs increase
- Lower customer satisfaction due to unavailability of favored brands
3. Distributors
- Disrupted supply contracts and renegotiation pressures
- Warehouse congestion from last-minute stockpiling
- Strained relationships with international producers
How to Handle Tariff-Induced Disruption
Being proactive can help alcohol businesses mitigate damage. Below are key strategies to prepare for the possible return of tariffs.
1. Diversify Your Product Mix
Shift your portfolio toward domestic or non-tariffed spirits and wines. Brands like Felene Vodka, which are 100% American-made and distilled from organic sugarcane, provide high-quality alternatives that are immune to tariff risk.
2. Communicate Clearly With Customers
Transparency builds trust. Use shelf signage, website notices, and staff training to communicate reasons for price increases.
Suggested talking points:
- “Due to proposed federal tariffs, the cost of imported spirits may increase.”
- “We are working hard to maintain selection and pricing for our customers.”
3. Negotiate Supply Contracts Now
For distributors and retailers, locking in prices before any potential policy shift may limit the immediate cost impact.
- Request guaranteed pricing through Q4 2025.
- Explore domestic supplier partnerships to secure consistent inventory.
4. Educate Your Staff
Ensure your team understands the tariff situation. A well-informed staff can better explain price or product changes to customers without confusion or frustration.
What Can You Tell Customers?
Setting expectations is critical. Here are three ways to ease the conversation with your clientele:
- Empathy: Acknowledge customer frustration. Let them know you’re doing your best to avoid steep price hikes.
- Education: Briefly explain the role tariffs play in changing prices.
- Solution Orientation: Recommend quality domestic alternatives. For instance, Felene Vodka can replace imported vodka at a competitive price and with premium taste.
The Bottom Line
The effect of tariffs on alcohol goes far beyond trade disputes. For American liquor businesses, it means dealing with tighter margins, unpredictable supply chains, and concerned customers.
Retailers and distributors who plan ahead, educate their teams, and lean into U.S.-made products can weather the storm more successfully than those caught unprepared.
As we await further clarity on trade policy, one thing is certain: The next 12 months will be a critical time for decision-makers in the alcohol industry.
Final Thought
“Tariffs are taxes. They raise prices for American businesses and consumers,” said Chris Swonger, CEO of the Distilled Spirits Council of the United States. “We urge leaders to avoid actions that hurt our industry and economy.”
Now is the time to solidify your supply lines, communicate your pricing strategies, and support brands that provide value without volatility.
