The Distilled Spirits Council of the United States (DISCUS) recently held a webinar on the potential effects of tariffs on the bar and restaurant industry titled, “Pouring Over Spirits Tariffs: The Ripple Effect on the US Hospitality Sectors.”
There’s been some good news since the webinar was hosted—China and the United States have agreed to cut tariffs on Chinese imported goods to 30% from 145% for 90 days. However, the threat of higher tariffs on Chinese goods still remains, and the Trump administration is still working out deals with other countries across the world.
The webinar panelists emphasized that fair and reciprocal trade is critical to the growth of the industry. In fact, the spirits industry is uniquely positioned as a model of fair, reciprocal trade, especially since many of the products cannot be produced in the U.S. due to things like geographic indications (GIs), which restrict spirits production to a georgraphical origin.
Plus, according to Rob Maron, senior vice president, International Trade Policy and Market Access for DISCUS, history shows the success of fair and reciprocal trade. He said since 1997, the U.S.-EU agreement to eliminate spirits tariffs has led U.S. spirits exports to the EU to increase by 620%. When those EU tariffs were suspended, American whiskey exports to the EU also surged 60%.
Here’s a look at the takeaways from the DISCUS webinar, including the possible fallout and how to protect your bar or restaurant.
Risks and Possible Effects from Tariffs
Christine LoCascio, chief of Policy, Strategy, & Membership at DISCUS, kicked off the webinar by highlighting that a 10% tariff on imported spirits could result in 28,000 job losses and $2.4 billion in lost sales.
Sean Kennedy, executive vice president, Public Affairs at the National Restaurant Association, noted that tariffs pose a significant threat to the restaurant industry's already fragile economic model.
“We understand that the challenge for the restaurant industry is our business model is very low margins, very low cash on hand. Average restaurants have a 4-6% profit margin. The average restaurant has between 14 and 16 days of cash available,” he said. “[Restaurants are] affected by tariffs the way that every other business is with higher input costs, but we are much less able to find workarounds for that with such low profit margins, and we're dealing with such a hangover in higher prices post-COVID from an inflationary perspective.”
From a bar and restaurant perspective, Blair Ault, president of the Houston Chapter of the U.S. Bartenders’ Guild and National Brand Ambassador of Milam & Greene Whiskey, said tariffs pose a significant threat to the hospitality ecosystem.
She explained that bartenders are frontline economic indicators—if product costs go up, they feel the impact immediately through customer pushback, fewer sales, or lower tips. She said even a 25-cent price increase can lead to a significant cut in bartender tips. “If the gratuity was always $1 before, now it's 75 cents. It's a 25% reduction in your what you're taking in on even individual things. And that's been happening as costs have already risen.”
Much of that rise in costs has been due to inflation, but Ault said a Houston-area bar had already seen a 28% price increase in a tequila brand in just one week, thanks to the tariffs.
Ault says members of the on-premise community are also concerned with how tariffs may affect their careers. Tariffs can cut off career pathways as international brands frequently hire bartenders for ambassador work or marketing partnerships. If those brands reduce spending or withdraw, it's lost income and opportunity.
Long term, if tariffs end up forcing bars and restaurants to close, the effects there could also be devastating. Bars serve as economic connective tissue in communities, and closures threaten local economic ecosystems. Plus, all of the economic uncertainty could discourage new bar/restaurant investments.
What Can Bars & Restaurants Do to Mitigate the Effects of Tariffs?
So much is unknown about the tariffs situation, so it can be difficult for bars and restaurants to form a plan, but the panelists had some suggestions.
Operational Changes. Kennedy said most restaurants can really only plan two weeks in advance, but he recommends putting all considerations on the table from inventory management to supply chain sourcing to price increases.
“The restaurant operators that we're talking to are…looking at their rent, they're looking at their payroll, they're looking at their foods. [They’re asking:] ‘Do we cut back on a shift? Do we increase the cost of the menu item? Do we take something off the menu to try to simplify it?’” said Kennedy, who noted many of these decisions go against consumer wants. “None of those are good wins for the restaurant consumer. Restaurants diners want to see more restaurant investment. They want to see an even bigger menu and more choices and better prices. And as our prices increase, it makes it that much harder to do that.”
Make Your Voice Heard. Kennedy emphasized the importance of joining state and national industry associations, communicating with elected officials about the local economic impacts from tariffs, and joining groups and petitions like the Toasts Not Tariffs Coalition. He said it’s important to point out to elected officials that the industry is the second-largest employer in the U.S.
Ault recommended that operators also make their voices heard to consumers. She said educating consumers on tariffs and the reasons behind price increases is an important step as it can help build understanding and support.
By joining coalitions like Toasts Not Tariffs and continuing to share their stories, hospitality professionals can help policymakers understand the real-world impact of trade decisions, and hopefully spur them to champion open, fair markets that support innovation, job creation, and economic growth.
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