Trump's Trade War Is Harming the Craft Booze Business—and Dragging Down the Rest of the Economy in the Process
Catoctin Creek Distillery's tariff woes show that no one wins a trade war.
For most Americans, trade policy has a tendency to seem abstract, even invisible. Price tags on store shelves don't break out the cost of tariffs. When a company affected by tariffs sheds staff or fails to expand, there are often additional factors at play. Trade agreements themselves tend to be mind-numbing in their complexity, the sort of legalistic documents that only experts ever really read, and arguments about free trade are often heavy on theory or built around dull statistics. Economic policy counterfactuals are inherently speculative; with different trade policies in place, who's to say what would have happened?
And yet it's clear that the trade war Trump started with Europe is having a measurable impact—on, among other things, domestic craft liquor.
After the Trump administration erected tariffs on imported steel and aluminum, the European Union responded by creating new tariffs on goods produced in America, such as bourbon and rye whiskey. As a result, some domestic liquor producers have largely been cut off from the European market. Among those affected is Catoctin Creek, a small Virginia distiller that makes rye, gin, and high-quality fruit brandy.
As The Washington Post reports, Catoctin Creek was set to expand in Europe, where the market for American whiskey has grown considerably over the last 15 years. Instead, the tariffs have killed off nearly all of the company's European sales opportunities. The company has instituted a hiring freeze, delayed plans to buy new distilling equipment, and slowed orders from the farmers who supply the grains required for making whiskey. "It's essentially decimated our European business, and it's put our expansion on hold," Scott Harris, one of Catoctin Creek's co-founders, tells the Post.
Catoctin Creek's story shows how the trade war harms everyone involved in the process. It's the entire trouble with the trade war in miniature. It's bad for the owners, who have lost access to a market with a lot of potential for growth. It's bad for consumers in Europe, who lose access to the product. It's bad for for consumers in the U.S., who are likely to face higher prices—on top of already high prices caused by recent increases in demand for whiskey—as Catoctin looks up to make for the loss of expected revenue from European sales. It's bad for people who drink and design cocktails, because it makes interesting ingredients more difficult to obtain.
It's bad for the manufacturer that makes the stills Catoctin Creek might have purchased to help increase production for the global market. It's bad for the farmers who grow the rye and other grains the company uses to make its product. And just as the people and companies who do business with Catoctin Creek were affected, so will the people and companies who do business with those companies, and so on and so forth, in an ever-expanding spiral of economic decline. A trade war drags down everything it touches. It produces no winners.
On a day-to-day basis, these effects are hard for most people to see: Even if you're a regular consumer of Catoctin Creek liquor,* you probably won't notice a huge price difference unless you buy in bulk. If you live in Europe, it's likely you never had regular access to their product in the first place. And the company doesn't appear to be laying anyone off, so it's hard to count the jobs that simply were never created.
On the surface, the trade war may not look like it's doing much damage. But it is, and even if its effects are hard to see, we shouldn't forget what it's costing us.
*If you like good booze, you should be. I especially recommend their line of fruit brandies, which are produced the old-fashioned way, using fresh fruit that is juiced, fermented into a wine, and then distilled into an unsweet spirit, somewhat like Cognac. Try their peach brandy in a classic Philadelphia Fish House Punch. I promise your life will be better for it.