In 2018, American whiskey makers were hit with a surprise 25% tariff on imports to the European Union. However, a trade agreement ratified by the two governments means that whiskey makers, along with motorcycle and denim manufacturers, will soon no longer have to pay for the Trump-era E.U. tariffs.

Prior to the application of these tariffs, U.S. manufacturers were part of a global boom in the whiskey market, specifically Kentucky bourbon.

"We had been eyeballing Europe as the most logical place to invest and to grow and expand the brand," Amir Peay, the owner of the James E. Pepper Distillery, told NPR. "We thought we could really grow our business over there."

"That is, of course, until June of 2018 when, out of the blue, American whiskey got dragged into a trade war," Peay continued.

The tariffs were applied as a part of the E.U.'s efforts to gain leverage in a trade dispute over steel and aluminum.

Whiskey makers are planning to branch out into the E.U. market once again when the tariffs are lifted in January. Despite being a major importer of U.S. spirits, Europe saw a 53% drop in American whiskey exports after the tariffs were introduced. According to the Distilled Spirits Council, the drop in sales resulted in more than $300 million in lost revenue.

The issue was exacerbated when the COVID-19 pandemic arrived in the U.S., stifling distillers' business with bars and restaurants. In an effort to adapt, distillers focused more on retail sales as residents bought record numbers of whiskey cases for drinking at home.

"We had very strong domestic growth," Peay told NPR. "But it made us change how we wanted to allocate stock to Europe, and it altered what was going to be our growth trajectory in Europe."

While larger manufacturers may be able to bounce back, smaller manufacturers are likely to face an uphill battle.

Thanks to its division from the E.U., Britain has yet to remove its version of the tariffs on U.S. goods, including whiskey. However, distillers have hope that an agreement will be reached.

"It's not a light switch. We can't just flick it and immediately just, 'Let's go back to what we had,'" Peay says. "I'm not sure about 2022, but I am confident that 2023 and beyond... It's a very bright future for American whiskey in Europe."