Retaliatory tariffs imposed by the European Union and Canada are undermining investor confidence in American spirits.
In response to the U.S. imposition of a 25 percent tariff on aluminum and steel, which took effect on Wednesday, the EU announced it will impose higher tariffs on a range of American products, including beef, boats, bourbon, butter, jeans, motorbikes, and peanuts. These tariffs will begin on April 1.
For spirit producers like Brown-Forman, maker of Jack Daniel’s whiskey and other alcoholic beverages, the news felt like a splitting headache after a long night. On Wednesday, shares of Brown-Forman dropped 5% due to the escalating trade tensions between the U.S. and some of its closest allies.
Including losses from Tuesday, Brown-Forman shares have lost nearly 10 percent of their value.
Also on Wednesday, Canada, the largest supplier of steel and aluminum to the U.S., announced it will impose 25 percent reciprocal tariffs on steel products, along with raising taxes on several items, including tools, computers, servers, display monitors, sports equipment, and cast-iron products.
As a result, the cost of consumer goods in the U.S., Canada, and the EU is likely to rise, as companies pass on the additional costs through price increases. If businesses absorb the extra costs, their profits could suffer, potentially stalling expansion plans and reducing investments, which could have a broader negative impact on the global economy.
