Tennessee Whiskey Exports Slump Amid Trump Tariff Turmoil, Mtsu Report Says

Posted: May 17, 2019

President Donald Trump is a self-described "Tariff Man" whose hawkish views on trade represent a rare constant in his flexible ideology. But his assertions about trade policy suggest he either can't, or won't, grasp the fundamentals of the issue. (May 14) AP, AP

Tennessee whiskey exports fell more than 30% in the fourth quarter as the sector faces headwinds from tariffs.

Tennessee exports dropped overall by 5% in the last three months of 2018 as automotive sales slowed and companies faced retaliatory tariffs from China and the European Union, according to Middle Tennessee State University's Tennessee Trade Report 4th Quarter 2018.

Whiskey exports, which have climbed steadily in past years, dropped to $135 million from $197 million, according to the report.

"The issue is how long we can expect the state’s sluggish performance to continue," the report said. "A real wild card in the deck, is the future of retaliatory tariffs and whether they expand. The bottom line is that 2019 appears ready to provide plenty of obstacles for Tennessee’s exporters."

Trump's trade war with China continues
The drop in state exports comes as U.S. negotiations over tariffs with China have stalled. President Donald Trump announced earlier this month the U.S. would raise tariffs on $200 billion worth of Chinese products and China since announced it would retaliate with increased tariffs on nearly $60 billion worth of American products.

Brown-Forman Corp., owner of the Jack Daniel's brand, reported a 3% sales gain in the most recent quarter, but said the growth was negatively impacted by lower prices in some markets meant to offset new tariffs. The impact was mostly felt in Europe, according to the company's report.

"We remain on track to deliver another strong year of results as cost discipline helped offset some of the large burden we are absorbing due to the retaliatory tariffs on American whiskey,” Brown-Forman CEO Lawson Whiting said in the company's most recent report.

Where Tennessee ranks for exports
The state's decline came as U.S. exports climbed by 3.4 percent in the same time period, the MTSU report said.

Foreign shipments dropped by nearly $500 million and exports fell below $8 billion. The state ranked 38th among U.S. states for export performance. Auto shipments fell by more than $100 million and global sales are expected to struggle next year, the report said.

Aluminum exports increased significantly, and waste and scrap exports with previous metals nearly doubled to $117 million.

Tennessee saw the greatest impact from trade losses in Canada and Latin America, with exports to Canada dropping by $230 million to $1.97 billion.

Exports were up in January compared to the previous year.

Business leaders at a trade event in Denver on Tuesday said the Trump Administration's proposed 25% tariffs on a wide range of Chinese goods will mean higher costs that will have to be passed on to consumers if the tariffs take effect. (May 14) AP, AP

By Jamie McGee Nashville
May 15, 2019

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