US challenges ‘illegal’ American whiskey tariffs

The US has filed five disputes with the World Trade Organization (WTO) in response to “unjustified” and “illegal” retaliatory tariffs imposed by China, the EU, Canada, Mexico and Turkey – several of which affect American whiskey.

The US is challenging “illegal” tariffs imposed by various nations, some of which affect American whiskey

China filed its own case against the US with the WTO earlier this month.

The EU, China, Canada, Mexico and Turkey have all introduced tariffs on a range of American goods in response to president Donald Trump’s steel and aluminium tariffs, brought in to “protect the United States’ national security interests”.

The US argues that the steel and aluminium tariffs – set at 25% and 10% respectively – are “justified” under international agreements agreed between the US and its trading partners.

It claims the retaliatory taxes on US exports put into place by China, the EU, Canada, Mexico and Turkey are “completely without justification” under international rules.

“The actions taken by the president are wholly legitimate and fully justified as a matter of US law and international trade rules,” said Robert Lighthizer, US trade representative. “Instead of working with us to address a common problem, some of our trading partners have elevated to respond with retaliatory tariffs designed to punish American workers, farmers and companies.

“These tariffs appear to breach each WTO member’s commitments under the WTO Agreement. The United States will take all necessary actions to protect our interests and we urge our trading partners to work constructively with us on the problems created by massive and persistent excess capacity in the steel and aluminium sectors.”

Trade war saga

The US and China are currently embroiled in the “largest trade war in economic history”. Earlier this month, China imposed a 25% tariff on American whiskey in response to the US adding tariffs to an extra US$34 billion worth of Chinese products. This was on top of a 25% tariff on Chinese imports worth US$50bn.

Trump’s administration is also locked in a trade war with the EU as a result of the aluminium and steel tariffs. The EU responded with tariffs on €2.8bn worth of US products, including American whiskey, in June.

Brown-Forman confirmed the cost of its American whiskeys – including Jack Daniel’s, Woodford Reserve and Old Forester – would go up by approximately 10% in EU markets over the coming months where it owns its distribution – a direct result of the duty hikes.

In Canada, American whiskey was once again a target commodity as the country raised tariffs on more than 250 US-made products (10% for American whiskey) – as well as introducing a 25% duty on US metal imports.

For an in-depth analysis of the trade-wars, see the July issue of The Spirits Business magazine, out now.