President Donald Trump's threatened tariffs on imports from Mexico could take a toll on American automakers if and when they go into effect, economists and industry experts say, causing collateral economic damage as Trump seeks to pressure Mexico to take more action to curb the migrant crisis.
Major American automakers, like Ford and General Motors, have factories in Mexico, letting them benefit from lower labor costs by making vehicles or vehicle parts abroad before importing them into the United States for sale. The U.S. imported $93 billion worth of vehicles from Mexico in 2018, according to the Office of the U.S. Trade Representative, more than any other kind of good. About 22% of the vehicles GM sold in the U.S. last year were imported from Mexico, according to research firm LMC Automotive, The Wall Street Journal reports, while that figure is about 10% for Ford.
But Trump's tariffs, which he says would start at 5% on June 10 before escalating to as much as 25%, are effectively a tax on imports. When Ford or GM imports a car or part from Mexico, it would have to pay any tariff that's in place. That could significantly increase the cost of automakers' Mexican operations and disturb their complex supply chains, experts say. While Trump's announcement sent a variety of companies' stocks tumbling, it hit American automakers particularly hard: GM was down 5.5% in premarket trading Friday, while Ford was down 4%. Neither automaker responded immediately to TIME's request for comment.
If Trump's tariffs are enacted, automakers' supply chains will be among the first casualties, experts say. American companies, automakers included, rely on Mexico to provide items that aren't easily found elsewhere, says Susan Helper, an economics professor at Case Western Reserve University and former chief economist at the U.S. Department of Commerce. For example, U.S. automakers might import from Mexico certain instrument panels or a mold that makes a part unique to one vehicle. Tariffs could cause delays in their supply chain that spark a domino effect, she says.
"When you're importing something from Mexico it's not like you're buying lumber from Home Depot, where if the wood isn't available, you go to some other store," Helper says. "These relationships are longstanding, and the factories have a lot of very specific equipment needed to make a specific part."
A 5% tariff wouldn't lead to a total meltdown for automakers, Helper says. But if Trump steadily increases his tariffs to the threatened 25% level, they would cut into profit margins and likely lead to price increases for car buyers.
Even the initial 5% level could be a drag on automakers. Italy Michaeli of Citi Investment Research told the Associated Press that General Motors anticipates losing hundreds of millions of dollars if Trump's tariffs are imposed. But car companies with supply chains based elsewhere, like in Asia, won't incur the same costs, giving foreign competitors a potential advantage over their American rivals. "It's disproportionately hurting them," Helper says. (Foreign automakers that build cars in Mexico for sale in the U.S., like Volkswagen, would also be subject to any tariffs when importing goods to the U.S. from Mexico.)
Ann Wilson, SVP for government affairs at the Motor and Equipment Manufacturers Association, which represents vehicle suppliers and manufacturers, says that in the long run, Trump's tariffs will result in prohibitive price increases on auto parts and, eventually, vehicles themselves. The average cost of a new car in the U.S. is $35,000, according to Wilson, who says that Trump's tariffs could raise that to nearly $40,000.
"It will raise the cost to consumers, decrease jobs and decrease investment in the U.S. Jobs in putting together vehicles and putting together car parts would be lost," says Wilson, who adds that tariffs could also cause delays on parts needed to keep used cars running smoothly. "The parts that are coming in from Mexico are not just going to new cars," she says. "They're also going to shelves of retailers who provide parts to Americans so they maintain can those cars."
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May 31, 2019 at 08:15PM
The surprise announcement by President Donald Trump of an escalating tariff regime against Mexico sent ripples through almost every economic sector in the U.S., hammering American companies that sell automobiles or run railroads, grow vegetables or build power infrastructure.
Trump tweeted late Thursday that he is slapping a 5% tariff on all Mexican imports, effective June 10, and will raise those tariffs to 25%, "until the Illegal Immigration problem is remedied."
Whether it's avocados on a taco or a new Chevrolet Blazer SUV in the driveway, if the tariffs go into effect, Americans could feel it.
The companies that produce such goods felt it immediately Friday.
Shares of General Motors Co., which imports more vehicles into the U.S. than any other automaker, slid 4% at the opening bell. European and Asian automakers ship cars across the border to the massive U.S. market as well. Fiat Chrysler and Nissan Motor Co. both tumbled more than 5%
"For GM, we roughly estimate that a 5% tariff could be a several-hundred-million dollar annual earnings hit," said Itay Michaeli of Citi Investment Research.
That potential damage rippled outward to auto suppliers. American Axle & Manufacturing Inc. slid 4%.
All of the 11 sectors in the S&P 500 were getting hit Friday, save for utilities because there is no or little cross boarder traffic in that sector. Many investors trying to get out of the way off falling shares put money there, or in treasury bonds.
Companies in the consumer staples sector, sellers of food and groceries, were under significant pressure. Cysco Corp., Costco and Kroger, the nation's biggest grocery chain, all slid.
Constellation Brands, an American company that sells Corona and a bunch of other Mexican beers, plunged 7 percent. Molson Coors, which also makes Miller High Life and Leinenkugel, fell as well.
Chipotle Mexican Grill Inc., which advertises its food as the freshest, slipped 2 percent.
The companies that transport goods across the country, especially across the border were punished, too.
Kansas City Southern operates a commercial corridor of the Mexican railroad system and owns a track between Mexico City and Laredo, Texas. It gets almost half its revenue from Mexico each year. Its shares are plunged 7%. All major railroads fell, as did every major airline and tanker company.
"This is opening up a trade war in a new direction that had not been on the radar screen for most people, " said David French, senior vice president of government relations at the National Retail Federation, the nation's largest retail trade group. "This could be very disruptive and costly."
The most prominent mindset seemed to be bafflement, with industry groups again warning of price hikes for everyone.
"Threatening tariffs on Mexican imports while simultaneously seeking support in Congress for a trade deal aimed at keeping trade barriers low with Mexico is a confusing and counterproductive strategy," said Hun Quach, vice president of international trade at The Retail Industry Leaders Association. "Whether the rhetorical target is Mexico or China, the bill is adding up for American consumers who will pay the price for these tariffs."
Some of those groups sought to intervene, following others like Nike and Adidas earlier this month in the U.S. trade war with China, who warned an additional tariff of 25% will be "catastrophic."
"We appeal to President Trump to reconsider plans to open a new trade dispute with Mexico," said David Herring, president of the National Pork Producers Council and a pork producer from Lillington, North Carolina. "American pork producers cannot afford retaliatory tariffs from its largest export market, tariffs which Mexico will surely implement."
Tyson Foods Inc., which sells pork and beef, slid.
Early Friday, it did not appear that Trump was prepared to back down with just over a week until the tariffs would go into effect on Mexico.
In a tweet one hour after U.S. markets opened and plunged, Trump tied the immigration issue to tariffs.
"In order not to pay Tariffs, if they start rising, companies will leave Mexico, which has taken 30% of our Auto Industry, and come back home to the USA," Trump tweeted. "Mexico must take back their country from the drug lords and cartels. The Tariff is about stopping drugs as well as illegals!"
Associated PressIt's effectively a tax on partying: Just in time for summer in the U.S., the cost of chilling out with some guacamole and a margarita is about to go up for consumers.
President Donald Trump on May 30 issued a new threat to slap tariffs of as much as 25% on goods from Mexico, an escalation in his trade war that would raise the prices Americans pay for avocados and tequila.
Autos are by far the largest category of Mexican-made products sold in the U.S., and top manufacturers from Audi AG to Volkswagen AG produce vehicles in the country. Oil refineries in Louisiana and Texas, as well as builders reliant on imported steel, could be hit.
At the same time, Mexico also is a big supplier of fruit and drinks, and Trump's latest volley may, therefore, mean less joy in Margaritaville this summer.
Americans should be prepared to pay more for guacamole, avocado toast and many other items at restaurant chains like Chipotle Mexican Grill Inc. or Panera Bread Co. The fruit is on almost half of U.S. menus, according to Chicago-based researcher Datassential, and Mexican imports accounted for more than three-quarters of the U.S. avocado market last year, according to the Hass Avocado Board. Prices spiked last month as Trump was threatening to close the border.
Mexico is a favorite location for some of the world's top makers of TVs. Samsung Electronics Co. makes about 9 million sets a year from Mexican factories and LG Electronics Inc. makes about 4 million, according to Eric Chiou, a Taipei-based analyst with WitsView. Higher tariffs will hit these companies, which rely on North American sales for about one-quarter of their TV revenues. Taiwanese electronics manufacturer Foxconn Technology Group, which produces about 2 million Sony-branded TVs in the country, has facilities in Baja California and Chihuahua.
New tariffs could slam companies like Constellation Brands Inc. The Victor, New York-based seller of wines and other alcoholic beverages distributes Mexican-made Corona and Modelo brands and had 5.3% of the North American beer market in 2018, according to data from the National Beer Wholesalers Association.
Modelo Especial is the No. 1 imported beer in the U.S., Constellation boasted in a recent press release announcing a partnership with a Chicago-based nonprofit.
Like France with its regulation of Champagne, Mexico strictly controls the branding of tequila. Mexican law mandates that the name tequila only apply to products made from agave sourced from five states in the country.
Prices may rise for Jose Cuervo from Tequila Cuervo La Rojena SA, made in the town of Tequila. Global giant Diageo Plc owns Casamigos, the brand of tequila co-founded by actor George Clooney that London-based Diageo Plc agreed to purchase in 2017 for as much as $1 billion. Diageo also owns Tequila Don Julio, made in the western state of Jalisco.
Bloomberg(SAN FRANCISCO) — Facebook CEO Mark Zuckerberg's personal security chief faces accusations of sexual misconduct and making racist and homophobic comments, according to a report Thursday by a business news site.
In a detailed article, Business Insider cited legal letters reportedly written by former employees of Zuckerberg's household staff. The letters reportedly described pervasive discriminatory conduct and severe levels of sexual harassment and battery, including racist and homophobic comments about members of Zuckerberg's staff and his wife, Priscilla Chan.
The security chief, Liam Booth, is a former Secret Service officer, according to his LinkedIn profile, and has been with the family's charitable organization, the Chan Zuckerberg Initiative, since 2017.
A spokesman from the family office of Zuckerberg and Chan said Booth has been placed on administrative leave pending an investigation of unspecified misconduct allegations. The spokesman said the office takes workplace misconduct complaints seriously.
Iconiq Capital, the firm that manages Zuckerberg's affairs that includes security, did not return a message for comment Thursday. The law firm representing the employees, The Bloom Firm, also did not return a message for comment.
Facebook spent $20 million on security costs for Zuckerberg and his family at his residences and while traveling in 2018, according to a regulatory filing.
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Apple is planning to unleash a slew of new apps, features and development tools at its annual software conference. To improve its devices and strengthen its connection to customers, the consumer technology giant will continue to walk a fine line between wooing outside app makers while also competing against them.
The Worldwide Developers Conference, or WWDC, starts June 3. The company will reveal updates to the operating systems that run the iPhone, iPad, Mac, Apple Watch, and Apple TV. Highlights include upgrades to core iPhone apps such as Maps, Reminders and Messages; new apps for the Apple Watch that make it more independent from the iPhone, and enhancements to the health tracking capabilities of Apple devices, according to people familiar with the plans.
Since launching the iPhone in 2007, Apple has pursued an aggressive approach to refreshing its mobile operating systems each year. The fast pace is taxing on Apple engineers, but the results have been impressive. The company's products are often unique and more capable than those of rivals because Apple's home-grown software works so well with the hardware. The new updates also give users access to the latest services like Apple Music and the upcoming TV+ video-streaming subscription, which give Apple a recurring revenue stream.
It's a delicate balance. Part of the allure of iPhones and iPads also comes from all the different apps made by independent developers. The company provides new tools for these partners, but it is increasingly building its own versions of popular apps, too. That helps differentiate its devices from rivals but sometimes upsets third-party developers. Spotify Technology SA and other app makers have complained to European antitrust regulators that Apple's own software and services give it an unfair advantage on the App Store. U.S. presidential candidate Elizabeth Warren has proposed splitting the App Store from the rest of the company, although few other policymakers have supported the idea.
"Developers, from first-time engineers to larger companies, can rest assured that everyone is playing by the same set of rules," Apple said in a recent statement rebutting Spotify's complaint. "That's how it should be. We want more app businesses to thrive — including the ones that compete with some aspect of our business, because they drive us to be better."
New features coming to the Apple Watch illustrate the balance the company must strike. Apple plans to add the App Store directly to the Watch so users can download apps on the go. This could open up huge new opportunities for outside developers, boosting app installations. But Apple has its own new Watch apps in the works, too. There will be new health applications, a Calculator and a Books app for listening to audio books from your wrist, the people familiar with the plans said.
So far, Apple has managed to make the strategy work. The App Store drove $46.6 billion in spending last year, almost double the amount spent on Google's Android equivalent, according to Sensor Tower estimates. That's wooed more than 20 million developers who have created over 2 million apps for Apple's platform. At the same time, there are 1.4 billion active Apple devices in use, and 92 percent of iPhones and iPads run the latest operating system, or the version before that. The App Store and other digital services are on course to generate more than $50 billion in annual revenue soon.
Here are the software features Apple is planning to announce at WWDC 2019, according to people familiar with the plans. They asked not to be identified discussing unreleased product details. Apple's plans are fluid and could change between now and the event, people familiar with Apple's development process said. The company could also choose to push back some features until next year, like was done last year, they added. An Apple spokesman declined to comment.
The biggest change coming to the Mac this year is the ability for iPad apps to run on laptops and desktops, as Bloomberg News previously reported.
For the first time, Apple will allow developers who write iPad apps to re-work their apps so the software can also run on the Mac. This will be useful for developers who are looking to simplify their development process, but it will also brighten the macOS app ecosystem with several new applications. Developers will still need to submit separate versions of the app to Apple's iOS and Mac App Stores, but the new software development kit will mean they don't have to write the underlying code twice.
Beyond this year's conference, Apple is planning to expand the feature so iPhone apps can run on the Mac by next year. The year after that, the company aims to merge iPhone, iPad, and Mac applications into single downloads that can run on any Apple device. Eventually, it could also merge the App Stores.
While the developer conference is software-focused, the company often sprinkles new hardware announcements in at the event. For this year, Apple has been considering debuting a revamped Mac Pro desktop computer. It's also readying a new external monitor, codenamed J290, with high-dynamic-range support (so colors look much better).
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May 30, 2019 at 08:15PM
(NEW YORK) — Emails obtained by The Associated Press show an Ethiopian Airlines pilot pleaded with his bosses for more training on the Boeing 737 Max just weeks before one of the airline's jets crashed.
Veteran pilot Bernd Kai von Hoesslin (von-HOSS-lin) began emailing managers at Ethiopian just days after a Max operated by Lion Air went down in Indonesia last October, killing all 189 on board.
He warned that without more training, specifically on the Max's problematic anti-stall system, Ethiopian's pilots could be overwhelmed in a crisis and "it will be a crash for sure."
On March 10, an Ethiopian Max crashed, killing all 157 people aboard.
What the airline did in response to von Hoesslin's warnings is unclear, and whether it made any difference is a matter of dispute. But his emails have added to the debate over what role pilot error may have played in the two disasters.
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Gucci weighed into the abortion debate at its 2020 fashion show in Rome on Tuesday, unveiling several pieces that made reference to abortion rights and women's rights.
The fashion statement comes amid a battle over abortion rights in the United States. Earlier this month, Alabama passed the strictest abortion ban in the country with the goal of overturning Roe v. Wade, the 1973 case that effectively legalized abortion across the country. The last abortion provider in Missouri may lose its license this week, making it impossible for women to obtain a safe abortion in the state. Missouri is one of a handful of states that have recently passed abortion bans as early as six weeks, though many of those laws remain tied up in legal challenges.
Anti-abortion sentiments also remain strong inside the Vatican, not far from the site of the Gucci fashion show. At an anti-abortion conference in Rome on Saturday, Pope Francis compared abortion to hiring a "hitman to solve a problem" and said the procedure is never acceptable.
Gucci has recently faced accusations of racism and cultural appropriation. In February, Gucci withdrew a black balaclava sweater from stores following criticism that the black turtleneck and bright red cut-out lips resembled racist blackface imagery. Earlier this month, Gucci drew backlash over cultural appropriation for selling an $800 turban and positioning an article of faith as a fashion accessory.
The new collection featured in Tuesday's show included a gown with an embroidered uterus, a jacket with the feminist slogan "My body, my choice," and a shirt with the date in 1978 when Italy legalized abortion.
Alessandro Michele, Gucci's creative director, said at a press conference after the show that women "should be free to choose what they want and terminate a pregnancy," calling it "the most difficult choice for a woman to make," according to the Guardian.
In another interview, Michele said the collection draws inspiration from social movements of the 1970s.
"It was a historical moment when women — finally — rejected all the constraints that were imposed in the previous centuries and they became free," Michele told Women's Wear Daily. "That's why I am paying homage to the Italian law regarding abortion, the law number 194. It's unbelievable that around the world there are still people who believe that they can control a woman's body, a woman's choice. I will always stand behind the freedom of being, always."
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May 26, 2019 at 08:15PM
Memorial Day unofficially kicks off the warm-weather season. However, if you need last minute supplies for the holiday weekend, you should know that not every store or restaurant stays open.
We gathered information on what's open and closed on Memorial Day this year to help you have the best three-day weekend. And because the holiday honors those who have died while serving in our armed forces, the list below includes deals for veterans available at restaurant chains throughout America.
Here's what's open on Memorial Day 2019 — and what's closed.
This year, Memorial Day is on Monday, May 27, though many people like to celebrate all weekend with parades, sales and parties. This holiday falls on the last Monday in May each year to honor those who have died while serving in the American armed forces.
Yes, Memorial Day is federal holiday. That means many services like USPS, FedEx and UPS, most banks, the stock exchange and schools are closed.
Home Depot stores will be open for regular business hours. Veterans and active duty military personnel will get 10% off.
Sears stores will be open for regular business hours.
Kmart stores will be open during regular business hours.
Lowe's stores will be open for regular business hours and will offer deals on household appliances, outdoor decor and gardening supplies.
Macy's stores will be open during regular business hours, though some stores will operate with modified hours.
CVS stores will be open during regular business hours.
Rite Aid stores will be open during regular business hours.
Sam's Club stores will be open with modified business hours for members from 7a.m. to 6p.m.
Many stores will not be closed Memorial Day because it is a big day for sales before summer starts. However, one of the big retail favorites, Costco, will not be open on Memorial Day 2019. So if you need bulk items, make sure to get them the day before.
Olive Garden restaurants will be open for regular business hours.
Panera Bread restaurants will be open during regular business hours.
Red Lobster restaurants will be open during regular business hours. The chain will also offer a special Cedar-Plank Seafood event and deals on gift cards.
Denny's restaurants will be open during regular business hours.
Chipotle restaurants will be open for regular business hours.
Buffalo Wild Wings restaurants will be open for regular business hours.
Cheesecake Factory restaurants will be open during regular business hours.
Waffle House restaurants will be open for regular business hours.
Del Taco restaurants will be open for regular business hours.
Outback Steakhouse restaurants will be open during regular business hours. The chain will also offer their regular 10% off for service members and emergency medical service members.
Chick-fil-A restaurants will be open during regular business hours and select locations will be honoring our fallen servicemen and women with a 'Missing Man Table'.
Texas de Brazil restaurants will offer a Heroes discount of 20% for service members, emergency medical service people and teachers.
Twin Peaks restaurants let veterans eat for free from a select menu on Memorial Day at their locations.
Because these restaurants are franchise owned businesses, please check local restaurant for availability on Memorial Day for the restaurants below.
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(MILWAUKEE) — A Wisconsin judge has ordered Anheuser-Busch to stop suggesting in advertising that MillerCoors' light beers contain corn syrup, wading into a fight between two beer giants that are losing market share to small independent brewers.
U.S. District Judge William Conley for the Western District of Wisconsin on Friday granted a preliminary injunction sought by MillerCoors that temporarily stops Anheuser-Busch from using the words "corn syrup" in ads without giving more context.
MillerCoors sued its rival in March, saying St. Louis-based Anheuser-Busch has spent as much as $30 million on a "false and misleading" campaign, including $13 million in its first commercials during this year's Super Bowl.
However, the ruling did not affect all of Anheuser-Busch's advertising targeting MillerCoors, allowing the commercials that premiered at the Super Bowl to keep airing.
Anheuser-Busch's ad drew a rebuke from the National Corn Growers Association, which thanked MillerCoors for its support. In its lawsuit, MillerCoors said it's "not ashamed of its use of corn syrup as a fermentation aid."
Corn syrup is used by several brewers during fermentation. During that process, corn syrup is broken down and consumed by yeast so that none of it remains in the final product. Bud Light is brewed with rice instead of corn syrup, but Anheuser-Busch uses corn syrup in some of its other beverages, including Stella Artois Cidre and Busch Light beer.
MillerCoors applauded the ruling and said Anheuser-Busch should be trying to grow the beer market, not "destroy it through deceptive advertising."
"We are pleased with today's ruling that will force Anheuser-Busch to change or remove advertisements that were clearly designed to mislead the American public," said MillerCoors CEO Gavin Hattersley.
Anheuser Busch, however, called the ruling a "victory for consumers" because it allows the brand's "Special Delivery" Super Bowl ad to continue airing.
That ad showed a medieval caravan pushing a huge barrel of corn syrup to castles for MillerCoors to make Miller Lite and Coors Light. The commercial states that Bud Light isn't brewed with corn syrup. Anheuser Busch said the ad would air as early as this weekend.
"As the number one selling beer in the U.S., Bud Light remains committed to leading the alcohol industry by providing more transparency for consumers including letting them know about the ingredients that are used to brew their beer," said Cesar Vargas, Anheuser-Busch vice president of legal and corporate affairs.
Judge Conley ordered Anheuser Busch to temporarily stop using advertisements that mention corn syrup without references to "brewed with," "made with" or "uses," or that describe corn syrup as an ingredient in the finished products.
The ruling affects two Bud Light commercials and billboards that describe Bud Light as containing "100 percent less corn syrup" than Miller Lite and Coors Light.
Anheuser Busch said those ads are no longer up and the company had no plans to continue using them.
Judge Conley also denied an Anheuser Busch motion to dismiss the case, saying it was likely to succeed in proving misleading statements and some harm to the reputation of MillerCoors.
Chicago-based MillerCoors and Anheuser-Busch have the biggest U.S. market share at 24.8 percent and 41.6 percent, respectively, but they've been losing business in recent years to smaller independent brewers, imports, and wine and spirits, according to the Brewers Association.
MillerCoors maintains Anheuser-Busch is preying on health conscious consumers who have negative connotations of corn syrup, sometimes confusing it with the high-fructose corn syrup in sodas.
The feud threatens to disrupt an alliance between the two companies to work on a campaign to promote the beer industry amid declining sales.
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"You're going to drink a little more than you like, and you can't refuse," the late Anthony Bourdain told his co-star Eric Ripert when they ventured to China's Sichuan Province on his Parts Unknown television show.
Bourdain's statement perfectly expresses the Chinese style of drinking, and at the center of the country's drinking culture is the national drink baijiu, or "clear liquor."
The potent grain-based spirit has been produced for thousands of years in China and is much stronger than most Western spirits, typically coming in at between 40% and 60% alcohol by volume. (Whisky or vodka, by comparison, are around 40%). It's not sipped the way a fine single malt might be. Instead, shots of baijiu are taken neat during meals. If a toast is made, which happens often during dinners in China, it can be considered gauche not to throw back a slug of baijiu, tequila style.
Baijiu's popularity in the country of 1.4 billion people makes it the world's most consumed spirit—10.8 billion liters were sold in 2017, according to an analysis by the International Wines and Spirits Record (IWSR). But outside of China it is not well known and many of those who have tried it consider its taste an acquired one. Normally made from sorghum, the drink is fermented with a naturally harvested yeast and the same microorganism culture that is used to ferment soy sauce and rice vinegar. Indeed, one variety is called "sauce baijiu" because of its savory, umami-like flavors. Other styles are more appealing to non-Chinese palates, coming in fruity, light and sometimes sweet versions.
"Most people taste baijiu for the first time, the flavors are unfamiliar to them—it's easy to write off it off and assume there's something wrong with the drink," says Derek Sandhaus, author of the first English language book on the beverage, Baijiu: The Essential Guide to Chinese Spirits.
A few businesses are trying to change that perception, however, and with it baijiu's global appeal. One such outfit is Ming River, of which Sandhaus is a cofounder. It's a venture between one of China's oldest baijiu distilleries and a group of expatriate enthusiasts of the drink, who ran a baijiu bar in Beijing that was popular with both foreigners and locals. The bar came to the attention of Luzhou Laojiao—a state-owned in distillery in Sichuan, where baijiu is said to originate—and the firm approached them for help in getting into the American market.
Ming River is not alone in its quest. A Portland family has been making baijiu for more than seven generations, bringing their baijiu recipe with them with when they emigrated to the U.S. from Vietnam in 1979. The family's patriarch, Phan Ly, began distilling the spirit at home. When he retired from the family restaurant business, he decided to start a proper distillery. Today the Vinn Distillery is the U.S.'s only domestic baijiu distillery. Ly's five children took over the running of it when he passed away in 2012.
"When we first introduced baijiu to the consumers here in Portland it was rough going because we came to quickly realize that no one knew what baijiu was," Michelle Ly, one of the children, tells TIME.
To make the drink more approachable, she says Vinn Distillery reduced the potency of its signature bottling to 40% alcohol by volume, a level similar to vodka, and notes that the attitude toward the drink has slowly begun to shift.
"I think it has a lot to do with where craft spirit is today. People are much more embracing of spirits that taste different."
Ming River is hoping to capitalize on this new receptivity. The brand's founders are working with U.S. restaurants specializing in regional Chinese cuisine to create food pairings. They are also encouraging bartenders to come up with creative cocktail recipes.
H. Joseph Ehrmann, proprietor of the San Francisco bar Elixir, tells TIME that when he first encountered the drink he did not know what to do with it, but his bar now serves it in highballs, sours and punches—albeit with a word of warning.
"You wouldn't tell someone to drink an ounce of hot sauce or pickle brine without explaining what they are getting into. It's kind of like that," Ehrmann says. "But bartenders and customers alike are starting to get into it as a shot, just as they have in the past with other flavors that were new to them, like Fernet or mezcal," he says, respectively referring to the aromatic Italian spirit and agave liquor.
It's still early days. Products from Vinn Distillery are only found in five states and drinks featuring Ming River are on the cocktail lists of not more than 65 bars and restaurants across the U.S., so far mostly in New York and California. (It's also available in some European cities.) If you're looking for it on store shelves, you'll need to track it down in hipster enclaves like Brooklyn.
Nevertheless, there is optimism among its devotees that baijiu's appeal will grow. Amelie Kang, the cofounder of a popular Sichuan restaurant called MaLa Project, which has two locations in Manhattan, says she plans to put Ming River on her menu in the coming weeks, both as a straight drink and in cocktails with ingredients like passionfruit puree and osmanthus syrup.
Kang drank baijiu in her native China, but she says never really appreciated it until she moved in New York and missed the drink from home.
"I thought it was a grandpa and dad's drink," Kang tells TIME, adding that baijiu is going through a reinvention. Brands in China are trying to appeal to younger audiences, she explains, using trendy packaging and releasing versions of the drink that are supposed to be added to cold tea—a popular cocktail mixer.
Some experts say that the fiery drink has a long way to go before it makes an impact on happy hour.
"A lot still needs to be done to educate [American drinkers] about the category—its history, where and how it is made and from what ingredients. They also need to be exposed to it and develop a taste for it," Tommy Keeling, Asia-Pacific research director at IWSR, tells TIME.
"It's encouraging to see that some companies are trying, but it is likely to remain niche for a long time," Keeling says.
But both Ly and Sandhaus are convinced that the spirit will continue to gain a following in U.S. and elsewhere. "I don't think all Americans are ready for baijiu, but I think enough of them are ready," Sandhaus says. "There are enough consumers who aren't put off by it—who are, in fact, ready for new experiences and new flavors."
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May 22, 2019 at 08:15PM