American whiskey producers welcome EU tariff freeze

18th May, 2021 by Kate Malczewski

US distillers have expressed relief after the EU decided to temporarily suspend its proposed tariff increase on American whiskey.

Bourbon whiskey ice

The 50% EU tariff hike on American whiskey that was set to come into play on 1 June has been suspended

In a joint statement yesterday (17 May), representatives from the EU and US said they were beginning talks to address the trade conflicts over the global steel and aluminium industry that have resulted in tariffs on American whiskey, among other products.

As part of these discussions, they agreed to halt the 50% tariff on American whiskey that would have come into effect on 1 June.

Eric Gregory, president of the Kentucky Distillers Association, said: “This is welcome news as distillers in Kentucky and across America were perilously close to a crippling blow on European exports.”

Chris Swonger, president and CEO of the Distilled Spirits Council of the US, agreed, noting that a 50% tariff would have “forced many craft distillers out of the EU market”.

Meanwhile, Brown-Forman was “encouraged” by the decision: “We applaud the Biden administration and its EU counterparts for this positive step forward,” the company stated.

What are the EU tariffs on American whiskey?

Yesterday’s tariff suspension was the latest development in the ongoing trade dispute between the US and the EU that began in 2018, when former US President Donald Trump imposed tariffs of 25% and 10% on European steel and aluminium, respectively.

In response, the EU issued its own tariffs on US goods, including a 25% duty on American whiskey that was set to increase to 50% next month.

Though the forthcoming tariff hike has been suspended, the initial 25% duty still remains in place. The statement issued yesterday noted that both the EU and the US are committed to resolving their trade issues ‘before the end of the year’.

Over the past months, spirits industry groups have called for the full suspension of tariffs on American whiskey due to their dramatic negative impact on sales.

Tariffs caused Kentucky Bourbon exports to the EU to fall by nearly 50% in 2020; shipments to the UK, formerly Kentucky’s largest EU market, were also slashed by 50%.

Total American whiskey exports declined by 29% between 2018 and 2020, with sales to the EU falling by 37% and sales to the UK decreasing by 53%.

Gregory is hopeful the duties will be fully eliminated soon. “We are obviously thrilled that discussions have started and both sides are committed to resolving this issue by the end of the year,” he said.

“We look forward to getting back to zero tariffs and what we do best – crafting the finest Bourbon for all the world to enjoy.”

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