EU imposes 25% tariffs on US rum and vodka

The European Commission has imposed tariffs on US goods worth US$4 billion – including rum, vodka, brandy and vermouth – as part of a long-running aviation dispute.

The EU was granted permission to impose the tariffs by the World Trade Organization (WTO) last month. However it said it was ready to work with the US to settle the dispute once and for all.

Commissioner for trade, Valdis Dombrovskis, said: “We have made clear all along that we want to settle this long-running issue. Regrettably, due to lack of progress with the US, we had no other choice but to impose these countermeasures. The EU is consequently exercising its legal rights under the WTO’s recent decision.

“We call on the US to agree to both sides dropping existing countermeasures with immediate effect, so we can quickly put this behind us. Removing these tariffs is a win-win for both sides, especially with the pandemic wreaking havoc on our economies. We now have an opportunity to reboot our transatlantic cooperation and work together towards our shared goals.”

The 16-year feud, which centres around subsidies given to Boeing and Airbus, is now the WTO’s longest-running corporate dispute.

Reacting to the news, the United States trade representative, Robert E. Lighthizer, said the US was “disappointed”.

“The alleged subsidy to Boeing was repealed seven months ago. The EU has long proclaimed its commitment to following WTO rules, but today’s announcement shows they do so only when convenient to them,” he said.

In its latest tariff announcement, the EU has imposed additional tariffs of 15% on aircraft and 25% on a range of agricultural and industrial products, including several US spirits, tractors, ketchup and orange juice.

US whiskey is already the subject of EU tariffs after the organisation imposed 25% levies in retaliation to US tariffs on steel in June 2018.  

Meanwhile, the US imposed 25% tariffs on drinks including Scotch whisky, liqueurs and wine (not over 14% ABV) made in France, Germany, Spain and the UK in October 2019. 

A coalition of 20 trade associations representing the US, EU and United Kingdom wine and distilled spirits sectors has called for the immediate removal of tariffs.

The tariffs, the groups argue, have already led to substantial losses and will cause further grief to a sector dealing with the effects of coronavirus.

It is estimated that since the US tariffs were imposed in October last year, exports of Scotch whisky to the US have fallen by 34%, liqueurs and cordials by 28%% and wines by a whopping 54%.

In return, EU tariffs have led to a 41% drop in exports of American whiskey exports to the EU.

The trade group coalition said in a statement: “The application of excessive and unwarranted tariffs has to end. Hospitality businesses and our consumers, as well as producers, wholesalers and importers of distilled spirits, wine, and beer are being slammed from both sides of the Atlantic in an aircraft dispute wholly unrelated to the drinks business. This is on top of the closings of restaurants, bars, distilleries and winery tasting rooms because of the Covid-19 pandemic.

“The US and EU need to return to the negotiating table without delay. They need to immediately suspend the current tariffs as they negotiate an agreement to simultaneously eliminate additional tariffs on distilled spirits and wine in these disputes unrelated to the sector.”