US-China Trade War: Tariffs taste sour for U.S. whiskey maker

World
Europe

02:26

The US economy unemployment hit record low, but move away from confidence in the main areas is starting to look shaky. US whiskey entrepreneurs facing a sour trade climate has been disastrous. Our reporter Owen Fairclough has more detail.

There's not much time to let off steam when you're distilling award-winning spirits in rural Virginia. Catoctin Creek made its name in rye whiskey, but a sour trade climate has been disastrous.

"Most of our international trade has frozen."

We visited Scott Harris and his wife Becky - Catoctin's chief distiller - six months ago as U.S. President Donald Trump hit the European Union with steel tariffs. When the EU retaliated with 25 percent duties on U.S whiskey, among other products, Catoctin was the collateral damage.

SCOTT HARRIS, FOUNDER AND GENERAL MANAGER CATOCTIN CREEK DISTILLERY "At the beginning of 2018 we had a 25 percent forecast for our entire sales to come from Europe and this year it'll be about 1 percent."

Having invested around 100 thousand dollars to gain a foothold in the European market, Scott had to absorb the duties on existing orders. And Trump's trade battles with China are also hurting.

SCOTT HARRIS, FOUNDER AND GENERAL MANAGER CATOCTIN CREEK DISTILLERY "We are buying equipment, some of which has metal and steel in it coming from China so that is something we have to factor in."

But if tariffs are hammering businesses like this, the bigger economic picture has been rosy.

OWEN FAIRCLOUGH PURCELLVILLE, VIRGINIA "The US economy has been booming for months now, with national unemployment at record lows. It's even lower than that in this part of Virginia. But move away from Main Street and confidence in the economy is starting to look shaky."

Wall Street is ending 2018 in the red - the sell-off driven partly by fears of a recession, while tariffs preoccupy investors further afield, including Germany.

ROBERT HALVER, HEAD OF CAPITAL MARKET ANALYSIS BAADER BANK "If there is a deal between China and the United States the atmosphere will definitely improve, we know that."

If China and the U.S. can end their trade war, it will help entrepreneurs like Scott. But he's still having to change his business strategy.

Good news, at least, for American consumers looking for an authentic taste of home. OFA CGTN Purcellville, Virginia.