US and EU spirits groups call for end to tariffs: ‘There are no winners in a trade war’

Last week, some EU spirits and wines imported into the US became subject to a 25% tariff, while American whiskey exports to the EU have faced a 25% tariff since June 2018.

The next few months are the most important time of year for wine and spirits as consumers prepare for festive celebrations and gift-giving.

“​In order to protect the jobs and communities we support, we urgently call on the US and the EU to reach an agreement to de-escalate the current trade disputes by immediately and simultaneously removing the EU’s retaliatory tariff on US whiskey and the US tariffs on EU spirits and wines,” ​say the 15 associations in a joint statement.

Furthermore, they estimate the latest round of tariffs imposed by the US puts around 8,000 jobs at stake.

Collateral damage​

In the latest development, EU spirits and wine producers have been caught up in the dispute over aircraft subsidies between the US and EU and their respective plane manufacturers (Airbus in the EU and Boeing in the US).

The US won a $7.5bn arbitration award from the World Trade Organisation last month, after the WTO ruled that the EU supported Airbus with subsidised loans, allowing the US to impose countermeasures on EU goods – including French wine and Scotch and Irish whiskies.​​ These tariffs came into effect last week. The WTO has also handed the EU a victory in its counter case, with the WTO’s ruling on what tariffs it may impose expected next year.

A group of beverage alcohol associations from both sides of the Atlantic are now calling for an end to tariffs, saying their industries have become collateral damage. They have outlined their request in a letter to the US administration and EU Commission.

The 15 associations include spiritsEurope, the UK’s Wine and Spirits Trade Association (WSTA), and Cognac France from Europe; and from the US the American Distilled Spirits Association, Kentucky Distillers’ Association and the American Craft Spirits Association.

“Our industries are collateral damage in trade disputes that have nothing to do with the beverage alcohol sector,” ​says a joint statement from the 15 organisations. ​

“This new round of tariffs will further damage a transatlantic industry that has already been negatively impacted by the EU’s retaliatory tariff on American Whiskey.​

“Since the EU’s imposition of tariffs, American Whiskey exports to the EU have decreased nearly 21%.​

These tariffs are greatly harming the industry’s competitiveness, long-standing partnerships, workers and our farm suppliers.​

"The negative impacts will be compounded by these new tariffs on EU products entering the US tariffs are taxes on US consumers who create demand for these products in the US marketplace.”​

8,000 jobs at stake​

The organisations highlight that the US and EU beverage alcohol industries are interconnected: not only through imports and exports but because a number of multinational companies own brands which a distributed on both continents.

Furthermore, they estimate that new US tariffs on EU spirits and wines could result in the loss of 8,000 jobs across the US beverage alcohol sector: from importers, distributors, wholesalers to the hospitality sector.

“Prior to these recent trade disputes, US and EU spirits exporters enjoyed more than two ​decades of tariff-free access to each other’s markets, and US and EU wine exporters have ​faced very low tariffs.​

“This open access to each other’s markets has significantly benefitted EU and US distillers, vintners, farmers, and the hospitality industry on both sides of the Atlantic, resulting in increased jobs, community investment and consumer choice.​

“Additionally, many US wine and spirits exporters may face the increasing likelihood that the EU may respond by imposing more tariffs on US wines and other US spirits products.​

“The next quarter is the busiest time of the year for spirits and wine producers on both sides of the Atlantic as consumers gear up for holiday gift-giving and entertaining.”​