Suntory Preps for Tariff Wars Ahead of Trump's Second Term

TOKYO-The Japanese maker of Jim Beam bourbon whiskey is preparing for a rising risk of global trade wars by stockpiling in Europe, considering importing more U.K. scotch into the region and changing its sales focus in the U.S.

That, Suntory says, could shield it from the worst effects of higher tariffs in Europe in coming months and potential retaliatory reactions in some of the company's key markets around the world.

"Tit-for-tat could happen even among allies," Chief Executive Takeshi Niinami said. "We are confident to a certain extent that we can solve tariff-related issues by using our global supply portfolio and a wide range of sourcing options."

In Europe, he said, Suntory has been stockpiling American whiskey to protect itself from pending tariffs in the region, and is looking to sell more scotch imported from the U.K., which faces fewer tariff burdens across the economic bloc.

The company's U.S.-made bourbon whiskey is set to be hit with 50% tariffs in Europe next year under a long-suspended measure that was originally imposed by the European Union in response to U.S. tariffs on steel and aluminum levied by the first Trump administration. A suspension of the tariffs expires at the end of March.

In the U.S., meanwhile, Suntory is looking to sell more of its locally made bourbon whiskey. "It will become important to focus on selling more American whiskey in America," Niinami said.

Niinami, who has helmed the Japanese drinks giant for a decade since shortly after its nearly $14 billion acquisition of the Jim Beam maker, described the maneuvers as part of bracing for a potential showdown between the U.S. and its trading partners that could see punitive tariffs slapped on the goods that it ships to markets worldwide. He mused that President-elect Donald Trump conceivably could add tariffs on EU imports before Europe's 50% whiskey tariffs come into effect.

Trump said in a recent social-media post that unless Europe makes up for its trade deficit with the U.S. by buying more American oil and gas, it will be "tariffs all the way."

Suntory also is grappling with persistently high inflation that Niinami said is changing consumption in key markets. He thinks inflation has already sapped the appetite of American consumers, especially in the lower middle class.

In Japan, too, where high U.S. rates tend to depreciate the yen against the dollar and make imports more expensive, higher prices are making customers more selective, he said. "They make a certain amount of spending for special occasions, but there has been a tendency toward modest spending on normal days," he said.

The yen has recently weakened to near 158.10 against the dollar, its weakest in five months, as Japan's centralbank governor expressed concern about future U.S. economic policy and local wage trends, dimming hopes of an imminent interest-rate hike.

Inflation has been above the BOJ's target of 2% for over two years, while real wages have struggled to rise. "The Bank of Japan has definitely fallen behind the curve already," Niinami said.

Niinami has said he plans to raise the pay of Suntory workers by about 7% at annual negotiations next year. The company gave 7% increases for its Japan-based employees in 2023 and 2024.

Niinami, a member of the government's economic council, said that with the Japanese economy entering a new phase of inflation and rising interest rates, Japanese companies should focus more on improving their profitability. If they fail to catch up, that could prompt more consolidations and restructuring in corporate Japan or put them under pressure from foreign activists, he said.

Seven & i's case is a symbolic example, said Niinami, who is also a former head of Japan's convenience-store chain Lawson. The fact that the Japanese owner of 7-Eleven is mulling a buyout offer from Canada's Alimentation Couche Tard shows a change in Japanese companies' attitude from a time when they would have flatly said no to such a proposal, he said. "The tide is turning significantly from the deflationary period," he said.