[BND] Your Breakfast Briefing

Good morning and Happy Friday, March 28, 2025.

Dear Friend and Subscriber:

We spent most of yesterday at the DISCUS annual conference. We'll have a complete report on that later today in Kane's Beverage Week which will also include a complete wrapup not just of the week's news but especially of yesterday's and today's news.

But I wanted to give you this morning a summary of a briefing DISCUS President Chris Swonger gave to reporters yesterday, especially because it focuses on the issue of the day – tariffs..

Trump on a Mission to Rebuild U.S. Manufacturing . . .

President Trump, DISCUS President/CEO Chris Swonger told the DISCUS Annual Conference, is "1000% committed to reducing the U.S. trade deficit with long-standing trading partners. He's 1,000% committed to inspiring more American manufacturing jobs, depending on the market.

"And he's 1000% committed, particularly with Mexico and Canada, to addressing the fentanyl epidemic. I heard on TV the other day that 100.000 people die every year from fentanyl. Border security is another issue they are focused on."

So, Swonger said, Trump is pushing forward on an America First policy. "On the one hand, as an American, how can you argue against bringing down the trade deficit, bring more American manufacturing back to the U.S.. – aluminum and steel?

Swonger said he understands that only 5% of steel is manufactured in the U.S., only 4% of aluminum. "You need those products for national security purposes. Fifteen years ago, China had 5% of the aluminum market. Today, they have 70%. So you see the broader things he is trying to accomplish."

. . . But Spirits Is Different from Steel or Aluminum

Swonger recalled the U.S. distilled spirits industry experienced tremendous growth, from 1997 to June 2008, when the EU slapped a 25% tariff on American whiskey. "It was unfortunate the EU had a 25% tariff on Americans. We lost 20% of exports."

That caused a lot of pain, Swonger said, noting that American whiskey is exported from 34 states, and all types of American distilled spirits are exported from 44 states. About three weeks ago, the EU made a mistake because they said they were going to put another 50% tariff on American whiskey. And that prompted a response by the President.

Swonger said Americans love tequila, Irish whiskey, Scotch whiskey, cognac, etc.. At that same time, in the last 15-20 years, "we've seen amazing growth for American whiskey around the world. The only way for American whiskey and American distilled spirits to compete is to compete is in zero-for-zero markets."

Fifty-one markets which are zero-for-zero, and those markets account for 86% of U.S. distilled spirits exports, he said.

"It was a mistake for the EU to do what it did in announcing an additional 50% tariff on U.S. distilled spirits, and it was unnecessary," Swonger said. "It was a political calculation, and we are doing our best to educate the administration and to untangle the spirits industry from the broader events."

Swonger said that while Trump is to announce reciprocal tariffs on April 2, it's not exactly clear what the details of that are. "But as we understand it, if you put a 10% tariff on U.S. automobiles, They're going to put a 10% tariff on automobiles from that country."

Trump Seeks 0% Tariff on U.S. Spirits in India

Swonger said DISCUS has been battling a 150% tariff in the biggest whiskey market in the world, India. American whiskey's market share in India "isn't even a pancake. Why? Because it's a 150% tariff."

About a month ago, Swonger said, Indian Prime Minister Modi was in the Oval Office and he voluntarily cut the tariff to 100% from 150%, ""which is awesome, but it's still a 100% tariff."

The U.S. and India are about to negotiate a free trade agreement, and Swonger said he had just heard Trump "is committed to getting us a zero tariff in India. In the meantime, as the President said, we're going to be going through some choppy waters."

Educating the Administration

Swonger said as an advocate he has to be bipartisan. "We're not the Republican Party or the Democratic Party, we're the Cocktail Party," he said. "We work hard every day to make sure we do everything we can to untangle the spirits industry, collectively – even our great import partners around the world because they contribute to the American economy in a significant way."

Swonger explained the spirits industry is unique "because we make distinctive products. You can't make tequila, and I had to educate them on this, in the U.S. You can't make American whiskey anywhere" but in the U.S.

"These folks are trying to do big stuff," Swonger said, "and we are going to work really, really hard to untangle us. We need the EU to cooperate. We need Mexico to cooperate, to protect the precious tequila industry, and the same with Ireland and cognac and France."

Swonger said DISCUS is "working hard, working very closely with all the other trade associations. There is no light between the industry. Nobody's jockeying to get an exclusion of one or the other. We're all in this together, and just we're working really, really hard with the administration.

"April 2 is going to be unique and and then we'll see what happens." DISCUS, he said, is giving "everything we got to untangle us, to protect American whiskey, but same time, help (the Administration) understand that products from our great trading partners are distinctive products, and this industry is unique. We're intertwined."

Thanks for reading. I'll be back later with a complete report on the DISCUS conference but other news. – Joel