By Brad Tuttle
February 7, 2017

America first? That hasn’t been the case lately when it comes to booze. The surging strength of the U.S. dollar means that wholesale importers have been paying cheaper prices for foreign alcoholic beverages making for higher American consumption of alcohol that’s not homegrown.

The Wall Street Journal reported on Tuesday that alcohol imports in the U.S. rose 6% last year, reaching $17 billion through the first 11 months of 2016. Once the final numbers are tabulated, 2016 will likely go down as the biggest year for alcohol import sales in more than two decades.

Meanwhile, sales of domestic alcoholic beverages—California wines, Kentucky whiskeys, numerous craft beer brands, and more—were up a mere 2% last year, representing the slowest growth in four years.

At first glance, you might assume that American consumers have been buying more imported alcohol because prices have dropped. Oddly enough, that’s not the case. While wholesale prices for imports have retreated by way of the stronger U.S. dollar, these savings have not been passed along to customers in the form of cheaper French wines, Mexican beer, Irish whiskey, and such.

“For the most part, the stronger dollar hasn’t yet translated into cheaper alcohol for the American consumer,” the Journal noted.

If cheaper prices aren’t driving Americans to sip more imported alcohol, what is? Apparently, we’re hitting the foreign-made hooch more because the wholesales have significantly increased what they’re bringing into the U.S., resulting in a bigger supply and better selection in stores. That seems to be a key reason why, for example, Irish whiskey sales in the U.S. were up 16% last year.

If the Trump administration has its way, however, Americans could shift back to domestics soon enough. Among the strategies being pushed by Trump’s “buy American” and “America first” campaigns is the possibility of a 20% import tax on Mexico and perhaps other countries. Such a tax would obviously push prices higher for wholesale importers, and some portion of the price hike would likely result in a smaller selection and higher prices for imports on liquor store shelves.

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