The fortunes of American distillers may be about to change. Production of craft whiskey and other spirits has been booming in the United States, thanks in part to Europe's growing taste for them. But, as Owen Fairclough reports, those products have been suddenly caught in the crossfire of a global trade conflict.

From a trickle to a lucrative stream. Catoctin Creek Distilling was founded nearly ten years ago in rural Virginia.

"This is my rye. What I really love, I like a lot of fruit and spice in the flavor profile."

Becky Harris is Catoctin's Chief Distiller.

BECKY HARRIS, CHIEF DISTILLER CATOCTIN CREEK DISTILLERY COMPANY "This part of the Mid-Atlantic was full of rye whiskey before Prohibition. We wanted to bring some of that back."

And then take it transatlantic. Becky and co-founder and husband Scott invested years and 100,000 dollars to begin exporting to the European Union. It now accounts for around a quarter of their business.

SCOTT HARRIS, GENERAL MANAGER CATOCTIN CREEK DISTILLING COMPANY "Now we're really starting to see it just take off and all of a sudden these trade tariffs will impose a 25 percent price increase on us." 

The EU has targeted distilled spirits along with hundreds of U.S. products in retaliation for the U.S. applying duties on EU metal imports.

OWEN FAIRCLOUGH PURCELLVILLE, VIRGINIA "Distilled spirits have enjoyed huge growth here in the U.S over the last 20 years and are now manufactured and exported from 42 U.S States. So, the impact of those tariffs is being felt everywhere. According to the Distilled Spirits Council, nearly half of the exports are being targeted by tariffs. And it's not just the liquor. These tanks are made from European metal - and even that's been hit by tariffs."

Multinational companies caught in the crossfire can move production overseas, stockpile inventory, and even absorb price increases. That's not an option for small distillers like Catoctin that rely on local supply chains. And that means foreign rivals who aren't saddled with tariffs will benefit.

SCOTT HARRIS, GENERAL MANAGER CATOCTIN CREEK DISTILLING COMPANY "Countries like Scotland, obviously, but also Ireland, and France Canadian whiskey going into Europe as well. So we're competing with all of those world whiskies."

At least this setback doesn't mean lay-offs for a business that'd grown to employ 20 people in the heart of this community. They're determined to keep rolling out the barrel, so the world can enjoy a taste of rural Virginia.

SCOTT HARRIS, GENERAL MANAGER CATOCTIN CREEK DISTILLING COMPANY "American whiskey is some of the finest out there. Let us compete freely and fairly and we'll always win. But once we start seeing tariffs come in, it becomes very difficult to compete."

Owen Fairclough, CGTN, Purcellville, Virginia.