US whiskey industry welcomes EU tariffs suspension

The US whiskey industry has applauded the suspension of tariffs on US whiskey announced today, weeks before they were due to be hiked to 50%. 

In June 2018, the EU imposed 25% tariffs on imports of American whiskey and bourbon in retaliation for tariffs imposed by Trump on EU steel and aluminium, which were set to double to 50% in June.

In a statement on Twitter, EU Commissioner for Trade Valdis Dombrovskis announced the temporary suspension in order to give the two sides time to come to a solution.

“In our effort to reboot transatlantic relations, EU will temporarily suspend the increase of its rebalancing measures on U.S. 232 steel & aluminium tariffs.   This gives us space to find joint solutions to this dispute & tackle global excess capacity,” he said. He also thanked US COmmerce Secretary Gina Raimondo and US Trade representative for their “engagement and cooperation”, who had announced they would start talks to address global steel & aluminum overcapacity. 

Chris Swonger, president and CEO of the The Distilled Spirits Council of the United States (DISCUS) said the news on the bourbon and whiskey tarriff suspension “couldn’t come soon enough”.

“Distillers across the United States are breathing a huge sigh of relief after bracing for a 50% tariff on American Whiskeys in just a matter of days that would have forced many craft distillers out of the EU market. We recognize there is still work to be done to get EU and US spirits back to zero for zero tariffs,” he said. “We greatly appreciate the Biden administration’s ongoing efforts to resolve these longstanding trade disputes and reduce the economic pain felt by those industries unfairly caught in the middle.”

According to figures from Discus, the tariffs caused US whiskey exports to the EU to plummet by around 29% in 2019 while UK’s tariffs on American whiskey saw a “debilitating” 53% decline between 2018-20, down from US$150 to $71million.

An organisation representing 48 associations of the US alcohol industry, ‘Toasts not Tariffs’ coalition pointws out that US whiskey exports have fallen by 37% to the EU since they were impose in June 2018.

The latest suspension marks an apparent de-escalation of the two tarrif wars between the EU and USA, which had seen levies slapped on a range of drinks of both sides of the Atlantic – despite the fact that Europe and America are the biggest and most profitable export markets for each other’s products.

In addition to the aluminium and steel /bourbon wars, the US government under former president Trump had imposed tariffs on $7.5 billion worth of EU goods – including wine, spirits and liqueurs – since 18 October 2018 as result of a 16-year dispute over aviation subsidies. This included still wine (not over 14% ABV) made in France, Germany, Spain and the UK transported in containers of 2 litres or less; Scotch whisky; single malt whiskey from Northern Ireland; and liqueurs made in Germany, Ireland, Italy, Spain and the UK th arate exported to the US are subject to 25% import tariffs. Shortly before leaving office in January the outgoing president added brandy to the list, hitting Cognac’s largest export market.

As previously reported by db, the Federation des Exportateurs de Vins et Spiriteux de France said total exports to the US last year fell 13.9% due to the combined effects of the tariffs and the coronavirus pandemic. 

However in March, the US suspended the 25% tariffs on Scotch whisky, and Washington and Brussels decided to temporarily shelve the tarrifs on each other’s drinks industries.