US targets EU spirits with retaliatory tariffs

30th May, 2019 by Melita Kiely

Brandy and liqueurs are among the alcoholic beverages that have been targeted with proposed retaliatory tariffs from the US in response to an ongoing dispute with the World Trade Organization (WTO).

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The US’s proposed tariffs include brandy and liqueurs from the EU

The US has been embroiled in a “long-standing” spat with the WTO over civil aircraft subsidies.

On 8 April, the United States Trade Representative (USTR) revealed a draft list of EU products that could be hit by retaliatory tariffs – including alcohol.

However, trade groups representing the alcohol industry in the US, including the Distilled Spirits Council, have said they “strongly oppose the inclusion of beverage alcohol production” in the tariffs.

The groups, which include alcohol suppliers, wholesalers, importers and retailers, have warned the proposed retaliatory tariffs on products imported from the EU could affect almost US$6.8 billion worth of imports and could result in a loss of between 6,600 and 45,800 US jobs, according to industry analysis.

Furthermore, the companies noted that several US firms within the alcohol industry, from farmers to suppliers and retailers, have already been “negatively impacted” by retaliatory tariffs introduced as a result of various US trade wars around the world.

The groups said: “We are gravely concerned that this escalation would compound the negative impact of the tariffs on a sector that is already feeling the damaging impact resulting from unrelated trade disputes.”

The comment was submitted by the Distilled Spirits Council, the American Craft Spirits Association, American Distilled Spirits Association, Kentucky Distillers’ Association, Wine Institute, Wine America, Wine and Spirits Wholesalers of America, American Beverage Licensees and the National Association of Beverage Importers.

Global disputes

US president Donald Trump locked the US in various trade wars in 2018 after imposing 25% and 10% tariffs on steel and aluminium imports respectively, effective from 1 June 2018.

The EU introduced retaliatory tariffs on €2.8bn (US$3.12bn) worth of US products, including American whiskey, in June last year. As a result, Brown-Forman confirmed prices of its American whiskey and Bourbon brands – which include Jack Daniel’s, Woodford Reserve and Old Forester – would go up by around 10% in EU markets where the company owns distribution.

In July, Canada responded with its own tariffs on more than 250 US-made products – including a 10% tariff on American whiskey.

That same month, China and US also became engaged in the “largest trade war” in history, after 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.

Mexico also hit back with a 25% tariff on American whiskey, exports of which were valued at US$13.4m in 2017.

Earlier this month, it was revealed the US had come to an agreement with Canada and Mexico to repeal retaliatory tariffs on American whiskey exports to both countries.

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