President Trump’s administration seems to be engaged in a secret war — a war on alcohol. First, they increased tariffs on aluminum, and those increases are causing the cost of beer production and therefore beer to rise. Now they’re putting tariffs on Irish and Scotch whiskeys. They are also considering new regulatory rules that are so onerous that in just one example they will force the entire whiskey industry to change their standard barrel size. Less whiskey per-barrel means higher whiskey costs.
We won’t stand for this! It doesn’t make economic sense. It doesn’t make safety sense. Changing from the industry standard 53 gallons per-barrel to 50 gallons per-barrel isn’t going to change much except harm an industry and increase prices.
Inside of the Treasury Department is a bureau called the Alcohol and Tobacco Tax and Trade Bureau that regulates and collects federal excise taxes on alcohol, tobacco, and firearms. While I hadn’t heard of this bureau before (not surprising given the size of the government) outside of the IRS and U.S. Customs, they are the largest tax collector for the federal government. From their website, the bureau is in charge of “enforcing the laws regulating alcohol production, importation, and wholesale businesses; tobacco manufacturing and importing businesses; and alcohol labeling and advertising.”
In other words, the Alcohol and Tobacco Tax and Trade Bureau controls the alcohol industry.
They have proven inept at this.
While Canada’s version of the bureau reviews more than 20,000 labels a year, the U.S. Alcohol and Tobacco Tax and Trade Bureau only reviews roughly 500. They don’t even do that well. When they conducted a study in 2016 they found that nearly 34% of the labels they had approved were not in compliance.
Instead of making things better and streamlining their process, just to catch up with Canada, they are looking at adding more regulations. The industry had high hopes for the bureau’s issuance of Notice No. 176, “Modernization of the Labeling and Advertising Regulations for Wine, Distilled Spirits, and Malt Beverages.” Maybe it would have lowered the burden for compliant labels. Maybe it was going to raise the boot of the government off of the backs of distillers the way that states have over the past few years. But, that didn’t happen, and instead it is forecast to more than double the amount of regulations that alcohol manufacturers will have to comply with.
It is hard to put this rule into context with the rest of what the president has done domestically. Trump’s legacy among businesses is that he has largely gotten out of everyone’s way. The Republican tax reform was sweeping and beneficial to building businesses and investing in those businesses. His cuts to regulations have been warmly received by industries far and wide. In fact, I recently spoke about business to a commercial sprinkler installer in Utah, and his support for the president couldn’t have been greater.
Trump’s policies have changed the whole business climate in the United States. The business owner said to me that almost immediately after Trump was elected his business started picking up, and that business now is growing even faster.
Adding regulations to any industry is bad, but when President George Washington supported increasing whiskey taxes, there was rioting. The difference in price of a spirit manufactured in a 50-gallon barrel and 53-gallon barrel might not be enough to start a full-out rebellion, but when all of the many other needless regulations from Notice No. 176 are added in, it might be enough.
Charles Sauer (@CharlesSauer) is a contributor to the Washington Examiner‘s Beltway Confidential blog. He is president of the Market Institute and previously worked on Capitol Hill, for a governor, and for an academic think tank.
