Free Trade

Tariffs Left His Distillery on the Rocks. Now He Wants To Know: What's Trump's Trade Endgame?

Is Trump using tariffs as a negotiating tactic? That's the most generous reading of his trade policy, but it's unsupported by the facts.

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Last year, President Donald Trump's trade war left Tom Lix's distillery shut out of European markets.

Now, as Trump threatens to escalate the trade war with another round of tariffs on Chinese-made goods, possibly before the end of the week, Lix says he doesn't understand where the president is going with all this.

"My morning coffee is from South America. I drive a Honda that's partially Japanese but was built here in the States," Lix, founder and CEO of Cleveland Whiskey, said Monday afternoon, as he spoke at an event organized by several groups opposed to tariffs and hosted at his downtown Cleveland distillery. "For me, I happen to make bourbon, and bourbon is something that's in demand around the world. We should be encouraging those types of trades. I just don't get it. I'm flabbergasted by it."

Prior to Trump's decision to slap tariffs on steel and aluminum imports last year, Lix says, about 15 percent of his sales were to Europe. When the tariffs took effect on June 1, the European Union responded by hitting American-made goods like blue jeans, motorcycles, and, yes, whiskey with retaliatory tariffs. From that point on, Lix says his distillery didn't sell a single bottle to the far side of the Atlantic.

At the time, the assumption was that both sides would quickly reach an agreement to roll back those tariffs and open up trade again. But months have passed, the Trump administration's attention has turned to China, and no trade deal has emerged with Europe. The tariffs remain in place—and, if anything, Trump seems more likely to hit European auto imports with a new set of tariffs than remove the ones already in place.

The most generous reading of Trump's trade strategy is that he's using tariffs as leverage to bring other countries to the table to sign trade deals that will, in the long run, allow for freer trade. That's certainly a more favorable argument than the nonsensical claim made Monday by Steve Bannon, former Trump advisor, who told Fox News' Lou Dobbs that the tariffs were necessary for the "self-empowerment" of the working class. Try imagining how Dobbs or Bannon would react to a Democrat saying higher taxes would be empowering.

Still, the evidence doesn't really back up the claim that Trump is using tariffs to get to freer trade. The only trade deal that's been completed under Trump's watch—a rewrite of the North American Free Trade Agreement (NAFTA)—is more protectionist than the old version. And the Trump administration apparently wants to keep the current tariffs on Canadian and Mexican steel and aluminum imports in place, even after the deal is finalized. It doesn't look like the administration is using tariffs to extract concessions, but rather that Trump wants them to be a permanent part of trade relationship among the three North American neighbors.

On other fronts, trade deals have not emerged as a result of the administration's bellicose strategy. Cleveland Whiskey—like many other businesses—is still waiting for European markets to open up again. Meanwhile, Chinese trade officials are heading to Washington this week to continue hammering out a potential deal—but Trump may have damaged the chances of finalizing an agreement this week after tweeting a threat to hike tariffs on Chinese imports.

"That just made my head spin. I think it's still spinning a bit," is how Ed Brzytwa, director of international trade for the American Chemistry Council, an industry group, described his reaction to seeing Trump's Sunday afternoon tweet. Speaking at the same event Monday afternoon, Brzytwa said any deal with China has to include the elimination of the tit-for-tat tariffs both countries have levied on one another's goods since last year.

"I think for the average business in the United States, they're probably having a hard time understanding what the endgame is here," he said. "Is it just a negotiating threat, or is this real? And it's really hard to plan around that."

Even if it all is nothing more than a complex negotiating tactic, is the pain worth the potential gain? A paper published in March by economists from the Federal Reserve Bank of New York, Princeton University, and Columbia University found that Trump's tariffs were costing American consumers and businesses about $1.4 billion each month. The costs of the tariffs "were almost completely passed through into U.S. domestic prices, so that the entire incidence of the tariffs fell on domestic consumers and importers," they found.

Trump continues to claim that China is paying for the tariffs, but even the president's own Council of Economic Advisors admitted in its year-end report that the estimated $14.4 billion in tariff revenue sent to the U.S. Treasury during 2018 was due to "costs paid by consumers in the form of higher prices."

If Trump follows through with his threat to slap more tariffs on Chinese-made goods, it could jeopardize as many as 2 million American jobs, according to The Trade Partnership, a pro-trade think tank. And, if implemented, they would make the United States far more protectionist than the rest of the world's top economies, according to CNBC economics reporter Steve Liesman.

There are other costs that can't be counted. On Monday, Lix highlighted the fact that his distillery was in negotiations to export their products to China before the trade war started. "The discussions we were having—which were taking years to get agreements in place—they all shut down because people said 'let's just wait until this is over. There's too much uncertainty,'" he said Monday.

That uncertainty created by the trade war rattled stock markets in both the U.S. and China on Monday. If Trump is truly using tariffs as nothing more than leverage against China, he might want to take a closer look at what that leverage is costing Americans.

"The idea that we would manipulate this and use this as, I believe, a political tool is just absurd," Lix says, "and it hurts a whole lot of people."

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73 responses to “Tariffs Left His Distillery on the Rocks. Now He Wants To Know: What's Trump's Trade Endgame?

  1. Trump is blamed for Europe’s decision.

    1. Exactly China renegs on agrements that they already made in writing so Trumps imposes tariffs but its Trumps fault

      1. +100

    2. Trump did this all on his own with the tariffs. Remember that #NationalEmergency declaration? Yeah, he owns this one and it’s going to be hard to convince anyone that’s not squarely in the Trump camp of anything different.

      1. Blasphemy! You must want to Make America Sad Again.

        Or Enslaved Again.

        Can’t have people making their own decisions about who to do business with. That way lies freedom, and heaven knows we don’t want to Make America Free Again.

        1. People are free to make their own decisions, so long as they make the “correct” decisions

      2. A rare moment of truth in these comments. You’d think the party of “law and order” would care about a fake national emergency to levy these tariffs, let alone the stupidity of them in and of itself but nope, apparently not.

        No one must go against the dear leader.

    3. Well, their decision didn’t just happen for no reason.

      1. Everything happens becuz orange man bad.

        1. Good or bad, what happened happened. Trump used executive action to put the tariffs in place. So the consequences are on him. Even if you think Trump’s trade ideas are good and necessary, you need to acknowledge that everything has its downsides.

          All politicians are bad. I’m not giving “orange man” a pass just because I like his opponents even less than him.

          1. Zeb, So…Trump gets the credit when this works?

            1. when this works?

              It can’t: Trump’s aim isn’t free trade. See what he did with NAFTA.

    4. Another shitty Bohemia’s offering. He really is doubling down on stupid.

      1. Another pointless post from shitlord himself. Big surprise.

  2. My takeaway is this guy distills whiskey in Ohio, but calls it bourbon. I don’t like him.

    1. No true Scotch-man

    2. I think if the grain bill is >51% corn, and the spirit is within a given proof range, and aged in new, charred, white-oak barrels, it’s bourbon.

      1. Some people prefer rules that limit bourbon to a drink produced in Kentuky. Because freedom and standard English are for elitist enemies of the people, or something.

        1. Fun fact: there are more barrels of bourbon in Kentucky than there are people residing in Kentucky.

          1. Important fact: There are as many unicorns as top-100 universities in Kentucky.

            1. Don’t need college to make a fine whiskey

      2. That is the legal definition, yes, but just because something is legal doesn’t necessarily make it right

      3. Unless it’s Tennessee Whiskey like Jack Daniel’s.

        All Tennessee Whiskey legally qualifies as bourbon, but the major Tennessee distillers deliberately choose not to use the term.

        There are extra filtering steps not required or prohibited under the legal definition of bourbon that are used by the makers of Tennessee Whiskey.

  3. Trade deficits are bad, period. Impose steep enough tariffs on imports and the trade deficit goes away because not one dollar of imports will come ashore. It’s true that without dollars in international circulation we will have no exports either, but it’s better to have equality in trade poverty than inequality in trade wealth. It just seems odd hearing erstwhile Republicans and conservatives and capitalists and free marketeers side with the socialists and the central planners on the idea. Trumpism’s a funny religion.

  4. So, it was the tariffs that killed his business in Europe not the fact that he was selling a bourbon made in Cleveland not Kenntucky? Yeah, that seems likely.

    And of course every demand curve is completely price elastic such that consumers would never pay more for it. Nope, they just stop buying.

    Reason’s defense of free trade should embarass anyone who believes in free trade.

    1. Free trade is whatever Trump says that it is… And even if the “free trade” accomplished by Trumpism is the exact opposite of whatever even Trump Himself says that it is, Trumpistas will be OK with it…

      …because Trump is The Man with a Plan!!!

      1. You are man with a lot of really incoherent thoughts.

        1. You are precinct captain of Libertarians For Tariffs. I imagine that position comes with a very good badge, maybe even a uniform with epaulets.

    2. I don’t think it’s driven by consumers as much as importers. I don’t find it surprising at all that importers would stop importing a small, not well established brand if tariffs increase.

      What do you think Trump’s trade endgame is?

      1. The endgame is to force our trading partners to treat our goods as well as we treat theirs. The United States has been treated unfairly by its supposed “partners” for years. Other countries impose tariffs on American products — there’s a reason you see almost no American cars in Europe — but when the U.S. talks about doing the same, they cry foul and pretend to be all about free trade. That’s not how this is supposed to work. Either both parties don’t use tariffs, or they both do. If European and Asian countries want their products to be exported to the U.S. without extra added costs, they’ll have to return the favor. Until Trump, they haven’t done so.

        1. +100

        2. Do you think his approach will work to accomplish that?

          I hope for the best, but I worry that we just end up with less free trade all around. I also like to think of trade in terms of people trading with each other, not countries and two wrongs don’t make a right. Other countries erecting barriers to trade doesn’t make it right for us to do it.

          1. Zeb, unless you believe China to be completely suicidal, why would it not?

        3. Either both parties don’t use tariffs, or they both do.

          … and when both do, there’s an arms race.

    3. Euro’s are notorious for limiting the naming of a food or beverage to the place it originated so that’s not out of the question. Then again using Cuyahoga river water may be a factor too.

  5. Trump threatens to raise tariffs in reaction to China trying to renegotiate earlier commitments, and you’re wondering if Trump is using tariffs as a negotiating tactic?!

    Some people don’t want to believe things because they don’t like the implications, and that’s a generous reading of what Boehm is writing here.

    I oppose Trump’s trade war. I’ve opposed from the very beginning. Even if he gets a better trade agreement than the one we have now, I’ll still go on the record saying that no one should ever engage in such tactics again–and Trump never should have gambled with our trade relationship with China that way.

    All that being said, just because I’m as free trade as anybody doesn’t mean I have to be intellectually dishonest or stupid about it. Trump is using tariffs as a negotiating tactic.

    1. I’ll still go on the record saying that no one should ever engage in such tactics again–and Trump never should have gambled with our trade relationship with China that way.

      So in your view there is nothing China could do short of war, that would cause you to support any trade sanctions against them? No amount of industrial espionage, no amount of control of industries vital to our national security, no amount of currency manipulation or unfair trade practices would ever cause you to think the US should retaliate?

      Really? All that to sell them some soybeans? Honstly Ken, is there any national priority you recognize beyond your personal access to cheap shit made by Chinese slave labor?

      1. Even if you could convince me that trade barriers against China were warranted because they are “enemies” or whatever, how do you explain increasing tariffs against the EU?

        1. The EU is also our enemy. They are Socialists and they hate our guts. Not every European but many of the elites.

          They refuse to lower EU trade restrictions.

          Fuck them. They need US markets more than we need EU markets.

          1. The EU is also our enemy.

            I can’t even respond to this.

            They are Socialists and they hate our guts.

            They just think that their version of central economic planning is better than Trump’s version.

            1. Elsewhere on the site they have an article on the EU’s GMO regulations, that talks about how irrational they are, but ignores the elephant in the room: They’re actually a protectionist measure to block imports of US agricultural goods, contrary to existing trade treaties.

              Is the EU our enemy in a Cold War USSR sense, a strategic adversary that would love to bury us, and have said as much?

              No.

              Are they our enemies in a, don’t uphold their end of bargains, love to stick it to us, regard us with barely veiled contempt sense?

              Yeah, of course they are.

            2. Leo, you can’t respond to it because its true.

              The EU is a shithole of bickering elites and hordes of Muslims who don’t even like the White Europeans that they are living with.

              A surprising number of average Europeans are nice enough but they let Socialism run their lives and are scared of any free market type trade with the USA.

        2. So your answer is that there is nothing China could do no matter how illegal or unfair to American companies that would cause you to ever take action to defend those interests?

          But remember, it is Trump that is the dangerous fanatic not the free trade cult.

          1. Is your problem reading or comprehension? I said that if you could explain the China tariffs, that explanation doesn’t explain the EU tariffs. Surely you don’t think Europe is doing all the same bad things as China… Or do you?

      2. “So in your view there is nothing China could do short of war, that would cause you to support any trade sanctions against them?”

        One of the things I suspect we disagree about is that I maintain that one of the biggest benefits of trade with China is cheap imports that undercut domestic competition on price, quality, or both. Giving up the benefit of that in order to initiate a trade war is a risky business.

        China is gaining some strategic advantages from using their government to force technology transfers, through cyber espionage, etc., but I believe they’re paying a price for those things in terms of missed opportunities they’ll never realize. I’m sure American companies take forced technology transfers into consideration when they decide to go ahead with establishing a manufacturing base in China, even after the Chinese government has forced them to form a joint venture.

        If American companies think it’s in their best interests to try to compete in the Chinese market despite some tariffs that were levied against them, who am I to argue with that? If American companies choose to go through with expansion plans in China because they think it’s still in their best interests, why should I argue with that either. Yes, I would rather China brought those forced technology transfer barriers down, but, no, I’m not in favor of risking the benefits of cheap imports to achieve something that American companies are already choosing to subject themselves to it.

        Betting the farm on a roll of the dice is a foolish thing to do, and it remains a foolish thing to have done–even after you win. I certainly hope Trump and the American economy wins. If Trump wins and gets those forced technology transfers removed, I’ll give him all the credit in the world–with the caveat that no one should ever make such a foolish gamble again.

        Incidentally, I don’t think Trump sees it as foolish. I think he sees it as a necessary risk. I don’t think he sees cheap imports as a great thing for the American economy either. I think he’s wrong about that.

    2. Trump threatens to raise tariffs in reaction to China trying to renegotiate earlier commitments, and you’re wondering if Trump is using tariffs as a negotiating tactic?!

      Ok, maybe. Now do the EU. What prompted increasing tariffs for goods we buy from the EU? It sure smells like good ol’ fashioned protectionism to me.

      1. HTML fail.

      2. I agree, it really smells not only from protectionism, but cronyism too. Sacrifice American consumers on the altar of auto companies, steel companies and electronics companies. Just wait until these industries have their supply chains disintegrate, then you’ll see serious problems.

        1. While I think he’s wrong for doing it, it was exactly what he ran on. He knew he needed the rust belt to win, and who doesn’t love protectionism more than union labor?

          As far as I know he was never clear on the campaign trail as to why he thought NAFTA was bad. I suspect this was also intentional, but his intention the whole time seemed to be to leverage NAFTA as another payoff to the UAW and American-based automotive suppliers by exporting our own bad policies by increasing minimum wage requirements and country of origin requirements. It’s good in the short term, potentially, for jobs (at least in those industries). But it’s bad in the long run for economic efficiency and consumers. His gamble is that he can be elected on the former, because the cause-and-effect relationship on the latter isn’t obvious to the average voter. But you’re correct that it’s cronyism, as most central economic planning is.

      3. “Ok, maybe. Now do the EU. What prompted increasing tariffs for goods we buy from the EU? It sure smells like good ol’ fashioned protectionism to me.”

        Are you unaware that the EU does impose trade barriers on outsiders that members inside the EU don’t have to contend with? I don’t think Trump is as big on the value of cheap imports to our economy as I am, but I don’t doubt that whatever tariffs he’s hit the EU with aren’t contingent on them being willing to negotiate to bring down their own trade barriers. Again, just because I don’t like what Trump is doing doesn’t mean there isn’t any logic to it. I just happen to disagree with his logic and his strategy.

        Meanwhile, even if whatever tariffs Trump has hit the EU with aren’t in the spirit of negotiating a new trade agreement, Trump’s tariffs against the Chinese are happening within the context of ongoing trade negotiations. Honestly, I’m not sure some of you would be aware that we were in negotiations with China for a new trade deal if I weren’t here bringing it up all the time. How you can claim that Trump’s threat to hike tariffs on Monday isn’t within the context of ongoing trade negotiations seems a little absurd.

        Incidentally, Trump’s tariffs that hit Canada hard also happened within the context of a renegotiation of NAFTA. The most likely reason to believe that Trump is slapping tariffs on anybody and everybody without rhyme or reason is because whomever is making the charge doesn’t like Trump. I’m getting a little weary of Trump’s critics who only seem to care about these issues insofar as they make Trump look bad. We’re certainly not about to win any converts to oppose Trump’s trade policy by pretending he has none but protectionism. That’s simply not true.

        He has a trade policy and he’s negotiating to get better trade deals for American workers, and his tariffs are part of those negotiations. I oppose his general objectives and his strategy. Pretending he has neither is getting it wrong.

  6. The most disturbing thing about this article is that, apparently, there are people who think that Trump is using tariffs as a negotiation ploy to get to free trade. Trump is using free trade as the negotiating ploy with the American people in order to raise tariffs on them.

    “I’m a tariff man”
    “Trade wars are good and easy to win”
    “Europe offered zero tariffs on everything and I turned it down”
    The last was followed by stating that he would never get rid of the tariff on pickup trucks.

    Trump has never made a dime without restrictions on his competitors. He lobbied very hard to keep New York from legalizing gambling to protect his inept casino operations in New Jersey from going under. As usual with Trump, he failed.

    Trump is the protectionist’s protectionist and when seen in that light, his every action makes sense.

    1. Briefing reporters before he left the town of La Malbaie, in Quebec province, Mr Trump denied that the G7 summit had been contentious.

      “No tariffs, no barriers. That’s the way it should be. And no subsidies. I even said, ‘no tariffs’,” the US president said, describing his meetings with fellow Group of Seven leaders as positive “on the need to have fair and reciprocal trade”.

      “The United States has been taken advantage of for decades and decades,” he continued, describing America as a “piggy bank that everyone keeps robbing”.
      -BBC

  7. What does the government do with the tariff money it takes? Too bad, Mr. Lix couldn’t sue for revenue his business due to the tariff and get the money out of the government’s tariff haul.

    1. Besides, he only pays off farmers for the mess he makes. Why you ask? They vote in droves.

    2. Most of it goes into operating CBP.

  8. Last year, President Donald Trump’s trade war left Tom Lix’s distillery shut out of European markets.

    The EU gets upset that Trump is trying to negotiate lower trade restrictions and bans guy’s alcohol.

    Muslim countries have been trying to keep out porn and alcohol for decades.

    I’m sure this guy will blame Trump for that too.

    1. When Trump raises tariffs, it is negotiation, but when EU raises tariffs, it is because they are mad? That’s the position you are going with?

      This is a game of chicken. Each country is holding a gun to their own heads. “You wanna sell to my citizens? Well I’m gonna make things more expensive on them!” Trump is betting that the unaccountable bureaucrats in Belgium will blink first and the EU is betting that they can hold off for 2 years until Trump is out of office, or until congress revolts on him. Both sides are negotiating, but for EU, I think they have the stronger hand. With China, it is 50/50. Their economy is hurting, and so they may have to blink first.

      1. The EU has not offered free trade or lower trade restrictions since Trump took office.

        I would guess off the fly that the EU has never offered free trade agreements to the USA.

        If the EU is mad AND negotiating or just mad that Trump is trying to get America lower trade restrictions with its trading partners, the EU is reacting to Trump opening move.

        All trading partners have blinked, its just how far they will go to lower trade restrictions to satisfy Trump.

    2. I believe that the liquor tariffs were intended to put pressure on senators from Kentucky. Which probably didn’t work.
      It is a response to Trump’s actions, and a fairly predictable one too. I don’t think it’s unreasonable to link it to Trump’s tariffs. Even if the tariffs are a good idea, anyone who has a clue can see that they have downsides as well and it’s silly to deny that that is the case.

  9. […] of iconic U.S. products, such as Harley Davidson motorcycles and bourbon have also seen sales drop. China has also turned to other markets for certain goods, which means […]

  10. […] of iconic U.S. products, such as Harley Davidson motorcycles and bourbon have also seen sales drop. China has also turned to other markets for certain goods, which means […]

  11. […] of iconic U.S. products, such as Harley Davidson motorcycles and bourbon have also seen sales drop. China has also turned to other markets for certain goods, which means […]

  12. […] of iconic U.S. products, such as Harley Davidson motorcycles and bourbon have also seen sales drop. China has also turned to other markets for certain goods, which means […]

  13. Actually the facts do support the policy, just not the author’s narrative. Any government trade policy is going to giveth and take away. Sham journalism.

  14. “My morning coffee is from South America. I drive a Honda that’s partially Japanese but was built here in the States,” Lix, founder and CEO of Cleveland Whiskey, said Monday afternoon, as he spoke at an event organized by several groups opposed to tariffs

    Translation: “I’m part of a wealthy elite, making products for the wealthy elite! I’m pissed off that this orange haired gnome is cramping my style!”

  15. […] of iconic U.S. products, such as Harley Davidson motorcycles and bourbon have also seen sales drop. China has also turned to other markets for certain goods, which means […]

  16. You guys just can’t stop yourselves from orange man bad, can you?

    Other countries violate free trade agreements, we endure some hardships fighting them to restore free trade, and Trump is the bad guy because hostile countries retaliate further. You know what they call that kind of policy? Appeasement. Reason writers are the Neville Chamberlain of free trade.

    Woe is me for my bourbon distillery suffering, but other Americans who are suffering from foreign protectionism? Fuck em.

    1. Also, when the people who are hurting from retaliation and benefiting from appeasement are more well off than their countrymen, we call that aristocracy. The king shouldn’t suffer when his nation is attacked, so his subjects must suffer further to prevent his hardship.

  17. Stop overthinking this. We’ve known for years that the Orange Sack is an amoral, nearly illiterate ignoramus with a genius for graft and effortless lying and losing a billion dollars in a decade.* “Endgame?” That word gives the Orange Sack far too much credit.

    * https://www.nytimes.com/interactive/2019/05/07/us/politics/donald-trump-taxes.html

  18. […] of iconic U.S. products, such as Harley Davidson motorcycles and bourbon have also seen sales drop. China has also turned to other markets for certain goods, which means […]

  19. The biggest mistake Trump has been making has been not just going full tilt from day one.

    If he had said “Look China, we want these things. IP, zero tariffs on anything going into China, no more joint venture requirement, etc. If you do not do these, we will levy 100% tariffs on 100% of goods coming in from China. This will happen 6 months from now. We can hammer out details between now and then… But if you don’t do those things, it will happen.”

    China would buckle so fast it would make your head spin. They are 100% dependent on exporting goods to the USA, but we can import cheap from from 100 other poor countries that make mostly the same commodity shit China does. We would be minorly inconvenienced, while they would go into an instant depression. Which is why they would cave.

    I’m not sure why Trump isn’t just doing this… Perhaps because he’s not that bright, maybe others have talked him into a softer and slowly stepped up approach… I dunno. But all you defeatists are outright WRONG that we couldn’t get what we want if we actually went after it.

    1. Nah. Don’t put tariffs on their cheap labor. Stop issuing student visas to their future workforce. That’s the way to apply pressure.

      You can’t win a tariff war with an enemy that doesn’t care about stealing your ideas and has cheaper labor and equal or better access to raw resources, because they’ll just make whatever we were going to sell them, cheaper.

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