The Trump administration is handing out tariffs the way Oprah handed out cars. “You get a tariff! And you get a tariff!” Except instead of a bunch of cheering Midwesterners jumping up and down and on the verge of conniption, the result is a number of businesses bracing for serious profit losses and much higher price tags on single-malt Scotch and French wine as well as parmesan cheese and Spanish olives. (Expect fewer holiday charcuterie parties this season). Add this to the goods already taxed in our trade-war with China, growing concerns of a recession, and economic times are indeed tough. At least there’s one silver lining in all of this: Beer. That’s right. Even in the midst of difficult economic times, the beer market stays steady.
First things first. Yesterday, the U.S. Trade Representative’s office released a list of goods that will be hit with increased costs. The list, which covers $7.5 billion in goods, includes a 25-percent tariff on single-malt Scotch whisky and french wine.
The tariffs are in response to a fight about airplanes. The U.S. is pissed that the European Union has been giving developmental subsidies to Airbus, which has hit Boeing who is trying to recover from the 737 scandal. The dispute has been taking place since 2004, but yesterday, the World Trade Organization allowed the U.S. to place tariffs on E.U goods to compensate.
The Scotch whisky industry is expected to take the largest hit when the tariffs go into effect on October 18th. Roughly $1.2 billion worth of the spirit is exported to the U.S. each year and the 25-percent tariff makes up about half of the value of taxed goods.
Who knows what else will be hit with tariffs as trade wars continue (let’s not forget about the myriad products affected by the Chinese trade war, the effects of which are beginning to trickle down). But if there’s one consolation in these unsteady economic times, it’s that beer prices won’t change.
Why? Beer sales historically don’t take a hit when the economy stumbles. Beer, like health care and tax service companies, are considered recession proof, which is why the financial blogosphere is increasingly all in on Molson Coors, Anheuser-Busch, and the liquor distribution company Diageo. The latter company stayed quite profitable during the Great Recession, with thanks due to its diversified portfolio model and the fact that beer sales never really falter.
With economists warning of recession and brown liquor selling at a premium, holiday season 2019 — the season of spending more on booze to get through awkward holiday gatherings and to fuel ugly-sweater party shenanigans — is turning into the beer season to end all beer seasons.
So what does this all mean? Buy Beer. Also, buy beer. Stock up then stock up. It’s beer season in America.