The U.S. and EU decision to suspend tariffs for four months signals a promising break-through in the longstanding trade dispute on civil aircraft subsidies, which has left much destruction to the spirits sector in its wake.
For nearly three years, American distillers have been collateral damage in the U.S.-EU trade disputes over aircraft subsidies and steel and aluminum tariffs.
Today’s announcement suspends the 25 percent tariffs imposed by the EU on U.S. rum, brandy and vodka in November 2020. In addition, the U.S. is suspending the 25 percent tariffs imposed on liqueurs and cordials from Germany, Ireland, Italy, and Spain in October 2019, and on certain Cognacs and other grape brandies from France and Germany in January 2021.
The suspension of these tariffs on spirits is happening at critical time for the U.S. hospitality industry. Lifting this tariff burden will support the recovery of restaurants, bars and small craft distilleries across that country that were forced to shut down their businesses during the pandemic.
Momentum is building for an end to these debilitating tariffs following yesterday’s announcement to suspend U.S. tariffs on UK products, including Single Malt Scotch Whisky, in connection with the civil aircraft dispute.
While this is a very positive development, the EU and the UK continue to impose a 25 percent tariff on American Whiskey, which will double to 50 percent on June 1, 2021. This excessive burden is unfair and not sustainable.
These tariffs have damaged what had been for many years a great American export success story. American Whiskey exports to the EU, our largest export market, grew from $502 million in 2008 to $702 million in 2018, an increase of 40 percent. Since the tariffs were imposed, our American Whiskey exports to the EU have declined by 37 percent and to the UK by 53 percent. Until steps are taken to address the dispute over steel and aluminum tariffs, American Whiskey — the United States’ largest spirits export category — will remain at a serious competitive disadvantage in our two most important export markets.
We commend the Biden administration for moving quickly to reset relationships with our trade allies and urge for a speedy resolution that eliminates all of these debilitating tariffs on spirits for good.