The U.S economy began the year on a tear, with stock markets extending a ten-year long rally. And while growth remains relatively robust, the economy ends 2018 with investor jitters partly driven by another word, beginning with ‘t’.
CGTN’s Owen Fairclough reports.
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,” says Catoctin’s founder and General Manager Scott Harris.
We visited Scott 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.
“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,” Scott explains.
Having invested around $1,000 to gain a foothold in the European market, he and Becky had to absorb the duties on existing orders. And Trump’s trade battles with China are also hurting.
“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,” Scott added.
But if tariffs are hammering businesses like this, the bigger economic picture has been rosy.
The U.S. 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, the Head of Capital Market Analysis, for Baader Bank, says “If there is a deal between China and the United States the atmosphere will definitely improve, we know that.”
And 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.
We’re putting as much as we can into the US, ” he says.
People will say to us ‘Why don’t you sell more in the US?’ And that’s a bit of a naive assertion because the market in the US is already really competitive and that’s one of the main reasons we went to Europe in the first place – to find a market where not as many American brands that we’re competing against.”
Good news, at least, for American consumers looking for an authentic taste of home.