Tennessee whiskey exports fell more than 30% in the fourth quarter as the sector faces headwinds from tariffs.
Tennessee exports dropped overall by 5% in the last three months of 2018 as automotive sales slowed and companies faced retaliatory tariffs from China and the European Union, according to Middle Tennessee State University's Tennessee Trade Report 4th Quarter 2018.
Whiskey exports, which have climbed steadily in past years, dropped to $135 million from $197 million, according to the report.
"The issue is how long we can expect the state’s sluggish performance to continue," the report said. "A real wild card in the deck, is the future of retaliatory tariffs and whether they expand. The bottom line is that 2019 appears ready to provide plenty of obstacles for Tennessee’s exporters."
Trump's trade war with China continues
The drop in state exports comes as U.S. negotiations over tariffs with China have stalled. President Donald Trump announced earlier this month the U.S. would raise tariffs on $200 billion worth of Chinese products and China since announced it would retaliate with increased tariffs on nearly $60 billion worth of American products.
Brown-Forman Corp., owner of the Jack Daniel's brand, reported a 3% sales gain in the most recent quarter but said the growth was negatively affected by lower prices in some markets meant to offset new tariffs. The impact was mostly felt in Europe, according to the company's report.
"We remain on track to deliver another strong year of results as cost discipline helped offset some of the large burden we are absorbing due to the retaliatory tariffs on American whiskey,” Brown-Forman CEO Lawson Whiting said in the company's most recent report.
Where Tennessee ranks for exports
The state's decline came as U.S. exports climbed by 3.4 percent in the same time period, the MTSU report said.
Foreign shipments dropped by nearly $500 million, and exports fell below $8 billion. The state ranked 38th among U.S. states for export performance. Auto shipments fell by more than $100 million, and global sales are expected to struggle next year, the report said.
Aluminum exports increased significantly, and waste and scrap exports with previous metals nearly doubled to $117 million.
Tennessee saw the greatest impact from trade losses in Canada and Latin America, with exports to Canada dropping by $230 million to $1.97 billion.
Exports were up in January compared to the previous year.
This article originally appeared on Nashville Tennessean: Tennessee whiskey exports slump amid Trump tariff turmoil, report says