Calls to end US-EU tariff war or risk thousands of jobs

Alcohol trade bodies have called for an end to US tariffs on certain EU distilled spirits, including single malt Scotch, after research estimated up to 78,600 US jobs could be lost if the tariffs continue or are increased.

The US imposed tariffs on EU goods last October, including single malt Scotch whisky

Trade body the Distilled Spirits Council of the US (Discus) and numerous other groups have written to the United States Trade Representative (USTR) urging an end to the tariff dispute.

The US imposed tariffs on various EU goods, including a 25% tariff on single malt Irish whiskey, on 18 October 2019 over an ongoing feud with the EU at the World Trade Organization (WTO) regarding civil aircraft subsidies.

The letter analysed the “significant harm” 10%, 25%, 50% and 100% tariffs on certain EU-made wine and distilled spirits could have on US jobs.

A 10% tariff would result in a loss of more than 11,200 US jobs, the groups argued, rising to almost 26,200 US job losses for a 25% tariff, increasing further to almost 47,100 US job losses for a 50% tariff, and nearly 78,600 US job casualties if a 100% tariff was brought into effect.

The letter highlighted a survey of wine and spirits companies regarding the initial tariffs impact, and said: “The imposition of tariffs on EU beverage alcohol products has already led to the loss of US jobs. We anticipate that these losses will grow the longer the tariffs are in effect, if the rates are increased, or if additional beverage alcohol products are subject to new tariffs.”

The groups also noted how retaliatory tariffs on US distilled spirits have had a “significant negative impact” on the alcohol industry.

Exports decline

American whiskey exports to the EU fell 29% from January 2019 to November 2019 compared to the same period the previous year, while American spirits exports to Turkey fell 42% during the same period. Meanwhile, American spirits exports to China dropped 8% during the same time, following 45% growth in 2018 and 160% growth since 2010. Turkey and China imposed retaliatory tariffs on American goods, including American whiskey, after the US increased tariffs on steel and aluminium, and billions of dollars worth of Chinese products.

The trade bodies expressed concern that continuation of the tariffs on EU beverage alcohol products would reduce US wine and spirits exports to the EU, said to be “the United States’ most important export market”.

The letter continued: “We strongly urge the US and EU to negotiate an agreement securing the removal of tariffs on EU beverage alcohol products and the EU’s 25% retaliatory tariff on American whiskey.

“Our EU counterparts share our strong opposition to the application of any tariffs on distilled spirits and wine, and are urging their governments and the commission to secure an agreement to eliminate these tariffs as soon as possible.”

The joint letter was submitted by Discus, Wine and Spirits Wholesalers of America, National Association of Beverage Importers, Wine Institute, American Beverage Licensees, Wine and Spirits Shippers Association, American Distilled Spirits Association, American Craft Spirits Association, Kentucky Distillers’ Association and National Restaurant Association.

In December, the US said it was considering increasing tariffs on EU goods, including Scotch whisky, due to the continued spat over aircraft subsidies.