US and EU suspend booze tariffs for 5 years following Boeing-Airbus breakthrough

The US and EU have agreed a deal in the long-running spat over Boeing-Airbus that will suspend tariffs for five years, just a month before the temporary tariff suspension was due to expire.

Speaking on the White House press call this morning, trade representative Ambassador Katherine Tai said the agreement resolved a longstanding “trade irritant in the US-Europe relationship”, and paved the way for a 5-year suspension of tariffs that were imposed on $7.5 billion worth of EU goods by former-President Trump in October 2018.

Trump’s 25% tariffs hit 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 and Spain. Shortly before leaving office in January the outgoing president added brandy to the list, hitting Cognac’s largest export market.

However the new administration, under President Biden, agreed a temporary halt to tariffs with Brussels, shelving the tariffs on each other’s drinks industries for four months while working towards a wider agreement over the aviation dispute.  This was set to expire on July 11, 2021.

The US also suspended the 25% tariffs on Scotch whisky.

Speaking on the press call, Tai said that “instead of fighting with one of our closest allies, we are finally coming together against a common threat”.

As part of the deal, the US has suspended the tariffs that were authorized by the WTO, for a total of five years. This includes the 25% tariffs imposed by the EU on US rum, brandy and vodka imposed in November 2020, and the 25% tariffs on liqueurs and cordials from Germany, Ireland, Italy and Spain imposed in October 2019, as well as certain Cognacs and other grape brandies from France and Germany imposed in January 2021. The EU has also

Chris Swonger, president and CEO of the Distilled Spirits Council, welcomed the news, saying the five-year suspension of tariffs came as a critical time for the US hospitality industry.

“Today’s announcement is an important building block to reset the bilateral relationship and we urge the administration to build on this positive momentum,” he said, adding that he appreciated the Biden administration’s work to reset relationships with the US’s trade allies.

However, he called on the EU and UK to drop the 25% tariff on American Whiskeys which had been imposed in retaliation for Trump imposing tariffs on steel and aluminum.

These tariffs had been set to double to 50% in June, but the increase was suspended in May to give time to come to an agreement. 

However Swonger said they were severely damaging “what had been for many years a great American export success story”.

“Until steps are taken to permanently remove these tariffs on American whiskeys, the United States’ largest spirits export category will remain at a serious competitive disadvantage in our two most important export markets,” he said. “It is critical to secure a return to the zero-for-zero tariff agreement on distilled spirits, which has been instrumental to our export success and job creation on both sides of the Atlantic since 1997.”

He pointed out that American whiskey exports to the EU – its largest export market – had grown 40% between 2008-2018, up from from $502 million to $702 million, but this had declined 37% to the EU since the tariffs were imposed, and down 53% to the UK.

“Lifting this tariff burden will support the recovery of restaurants, bars and small craft distilleries across that country that were forced to shut down their businesses during the pandemic.

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Scotch tariffs: counting the costs

EU tariffs costing Browne-Forman $US70m a year in lost sales