US-EU tariff war could cost 78,000 American jobs

6th August, 2019 by Melita Kiely

Up to 78,000 jobs in the American drinks and hospitality industries could be lost if alcoholic beverages, including spirits, are included in retaliatory tariffs between the US and EU.

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

The latest proposed retaliatory tariffs are part of an on-going quarrel between the World Trade Organization (WTO) regarding 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 EU wines and spirits.

The EU has also threatened to respond to the tariffs with its own tax hikes on US wine, vodka and rum.

Now, alcohol trade groups are urging the USTR not to impose retaliatory tariffs on EU alcohol after analysis showed that approximately 11,200 to 78,000 US jobs could be put at risk as a result.

The groups said in a joint statement: “If beverage alcohol products remain on the final US list, the EU would certainly respond by keeping US beverage alcohol products on its list, thus inflicting more damage on US companies that export to this critically important market and hampering the export progress that has benefited our sectors and created good paying jobs across the US.”

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

Last year, the EU introduced a 25% tariff on American whiskey after the US imposed tariffs on aluminium and steel imports. Since then, American whiskey exports have dropped 19% and several small US distillers and vintners have had orders cancelled, which has also had a knock-on effect on hiring workers.

Testimonies – jobs on the line

Chris Swonger, CEO of the Distilled Spirits Council, testified at the USTR hearing yesterday (5 August).

In his testimony, he said: “We are concerned that if the US places tariffs on EU origin spirits, including liqueurs and cordials, brandies and whiskies, it will lead to numerous negative unintended consequences for the US beverage alcohol sector and, therefore, the US economy.

“In sum, our industry has been fortunate to have enjoyed free and fair trade with the EU over the past 25 years. Unfortunately, American whiskeys have become collateral damage in an unrelated trade dispute.

“We urge the US to avoid the implementation of tariffs on distilled spirits and to re-engage with the EU to secure the elimination of tariffs on American whiskeys.”

Robert M Tobiassen, president of the National Association of Beverage Importers, also offered a testimony at the hearing.

Tobiassen said: “One of my smallest members told me that a 25 to 50% tariff would mean the loss of probably about 80% of its business; a 100% tariff would wipe it out. This would mean the loss of three jobs in the mid-Atlantic region.

“How do you tell your kids you lost your job in the in the alcohol beverage industry in the US because of some subsidy in Europe to Airbus? Is this the lesson that you want to teach kids about global trade? I say this both to you as US trade officials and to our EU counterpart trade officials.

“This is not a game of inanimate chess pieces; real jobs held by real people are on the line here.”

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