Irish Drinks Firms Threaten to Withdraw $100,000s from US Amid Tariffs

UPDATE: Several medium-sized Irish drinks firms may withdraw “hundreds of thousands” in investments from the US as a direct consequence of President Donald Trump’s recently announced tariffs on EU goods. This urgent development threatens to reshape the landscape for Irish spirits in one of their largest markets.

Eoin Ó Catháin, Director of the Irish Whiskey Association (IWA), revealed to The Journal that multiple small to medium-sized enterprises (SMEs) are reconsidering their US operations, even halting plans to hire additional sales representatives. “We are hearing from multiple SMEs who have made significant investments in the US market who are now considering pulling staff and changing their plans,” Ó Catháin stated.

The tariffs, which impose a strong 15% tax on goods from the EU and Ireland, along with 10% on Northern Ireland products, are already impacting the industry. Larger companies can absorb some costs, but Ó Catháin warns that the overall effect will be “wide and varied,” leading many firms to explore alternative markets.

John Kelly, CEO of Belfast Distillery, which produces approximately 500,000 liters of Irish whiskey annually, echoed this sentiment. “The US is currently our largest market, followed by Canada and Australia. The tariffs cause major disruption, and we’re looking at increasing our spending in other markets, including Japan and South Africa,” Kelly stated.

If tariffs remain in place, Kelly predicts that prices for Irish spirits on US shelves will rise by around 10%. “We can’t take on the hit to our margins from these tariffs, so we have to pass some of that on to our US retailers, and they will have to pass that on to the consumer,” he explained.

The IWA has continuously advocated for a return to zero tariffs, a situation that now appears uncertain. A recent US appeals court ruling deemed the tariffs illegal; however, they will remain until October 14 to allow Trump time for a Supreme Court appeal. Analysts widely expect the Supreme Court to uphold these tariffs, creating an urgent need for Irish firms to adapt.

Seamus Coffey, Chair of the Irish Advisory Fiscal Council, expressed concern over the broader economic implications. “Many US companies producing goods in Ireland may adjust their pricing to mitigate tariff impacts, which could significantly affect Ireland’s corporation tax revenue,” Coffey noted. “This is a source of big worry within government offices,” he added, highlighting the potential for a “fiscal shock.”

Coffey warned that for smaller companies unable to absorb increased costs, the US market may no longer be viable. “If a company in Europe can’t pass on that cost to the consumer, they may either experience lower profits or push costs onto their suppliers,” he stated.

Additionally, sectors beyond food and beverage may face repercussions. Irish leasing firms could struggle to sell second-hand planes in the US, potentially forcing them to relocate operations. “The leasing part might go as well, and that has all sorts of other implications,” Coffey cautioned.

Ireland’s exposure to these tariffs is significant, with approximately 27% of its goods exports heading to the US, three times more than the next most affected EU country. “This spells trouble for Ireland, as we are more exposed than any other EU country,” Coffey concluded.

As the situation develops, Irish drinks firms are faced with critical decisions that could reshape their operations and impact consumers in both Ireland and the US. The clock is ticking as they navigate this complex landscape, and the global community is watching closely.