US to consider additional tariffs on beer, gin and vodka

The US has initiated another tariff review on imported goods as part of an ongoing trade dispute with the EU, which could see it consider tariffs of up to 100% on beer, gin and vodka made in France, Germany, Spain, and the UK.

The dispute relates to EU subsides given to aviation company Airbus over US-based rival Boeing.

The US has already imposed tariffs on US$7.5 billion worth of EU goods – including wine, spirits and liqueurs – as result of this dispute. The country first imposed 25% tariffs on drinks including Scotch whisky and wine (not over 14% ABV) made in France, Germany, Spain and the UK in October 2019. 

The United States Trade Representative (USTR) announced an initial review of duties in December 2019. It released a further list of goods being considered for inclusion, such as wines made in all EU countries, and expanded the remit to include bulk wine, fortified wine and sparkling wine, as well as other whiskies made in Europe, most notably Irish whiskey.

Additional tariffs on $3.1 billion worth of goods

The latest tariff review includes this earlier list as well as further selection of goods. This includes gin (or genever), vodka and beer, as well as olives, chocolate and decaffeinated coffee. These additional goods, under 30 different headings, are valued at US$3.1 billion.

On 26 June the USTR will be opening an electronic portal for submission of comments regarding the tariff review.

The European Commission has condemned the review, stating that the measures could inflict “unnecessary economic damage on both sides of the Atlantic”.

A spokesperson stated: “This is particularly the case as companies are now trying to overcome the economic difficulties in the aftermath of the Covid-19 crisis.

“By potentially targeting new products, the US is increasing this damaging impact due to the cost of new disruptions to supply chains for the product potentially subject to new duties.

“We are concerned that this might even go beyond what is authorised under the WTO.”

The Distilled Spirits Council of the United States (DISCUS) shared the commission’s concerns. It said it was “strongly opposed to any additional spirits tariffs”, arguing that it “would only escalate trade tensions across the Atlantic and further jeopardise American companies and hospitality jobs already under duress as a result of Covid-19”.

In a report published this week, the industry body found that in the two years since the EU imposed a 25% tariff on all US whiskey exports, issued in retaliation to US tariffs on steel and aluminium from the EU, American whiskey exports to the EU had fallen by 33%, with the lost volume valued at US$300m.

The DISCUS statement continued: “The longer these disputes go unresolved, the greater the threat of even more tariffs on our industry. The EU has stated it may impose retaliatory tariffs this spring on US rum, vodka, and brandy in its parallel case at the WTO concerning Boeing. In addition, the EU is scheduled to increase its retaliatory tariff on American whiskey to 50 percent in spring 2021.

“We urge the administration and our EU trading partners to de-escalate this trade dispute by simultaneously removing the US tariffs on EU beverage alcohol products and the EU’s tariff on American whiskey.

“We will be participating in the comment process to register our strong opposition to any tariffs on distilled spirits products.”

It follows news that the US has also launched an investigation into countries that have adopted, or are considering adopting, a digital services tax.

The US had previously investigated France, which approved a 3% digital services tax last year. In December 2019, the US government proposed additional tariffs of up to 100% on French goods including wine, cheese and handbags in retaliation to this tax. However, in January this year, President Trump and the French President Emmanuel Macron agreed to a truce for a year.

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