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US spirits exports rebound after tariff removal

Exports of US spirits rose by 21% between January and July 2022 following the removal of the EU and UK tariffs on American whiskey, rum and vodka.

US spirits
Tariffs on American whiskey saw sales plunge between 2018 and 2021

A new export report from trade body the Distilled Spirits Council of the US (Discus) noted that US spirits are ‘gradually’ returning to growth after the lifting of retaliatory tariffs on spirits categories.

Between January and July 2022, American whiskey exports rose by 22%, compared to the same period last year.

US spirits exports rose by 14% to US$1.6 billion last year, compared to 2020, however it remains below the 2018 pre-tariff levels of approximately US$1.8bn.

“While US spirits exports tumbled between 2018 and 2021 due largely to retaliatory tariffs on American spirits imposed by the EU and UK, this latest data is an encouraging sign that consumers in these key export markets are beginning to return to purchasing American spirits,” said Rob Maron, Discus vice-president of international trade.

“We applaud the Biden administration for securing important agreements to suspend retaliatory tariffs on American spirits and are working to return to permanent duty free trade in spirits.”

The US and EU reached an agreement in October 2021 to suspend the EU’s 25% retaliatory tariff on American whiskeys for two years from 1 January 2022.

The US negotiated an agreement with the EU in June 2021 to lift retaliatory tariffs on American rum, brandy and vodka for five years, effective 11 July 2021.

Furthermore, the US and the UK made a deal in March 2022 to remove the UK’s 25% retaliatory tariff on American whiskey from 1 June 2022.

Rebuilding relationships

Maron noted that there remains many challenges for small distillers to ‘regain their footing’ in these markets, following the impact of tariffs, supply chain issues, rising shipping costs and inflation.

“It’s great the tariffs are lifted, but it’s going to take a bit more time for us to get the momentum back,” said Herman C Mihalich, founder and distiller of Dad’s Hat Rye Whiskey in Pennsylvania. “Returning to these important international markets has been challenging.

“We are working to rebuild our relationship with our EU importer after being out of the market for so long and, now with Brexit, we have had to seek out and engage with a new importer for the UK.”

Scott Harris, founder and general manager of Virginia-based Catoctin Creek Distillery, also cited a “much tougher competitive environment” as many European consumers moved to other spirits because of the trade spats.

Discus said its export promotion programme has resulted in more than US$875,000 in new exports of American spirits products by small US distillers.

Maron said regaining the EU market is “critically important” for US distillers but expressed confidence that EU consumers will “rediscover” American whiskies in the future.

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