EU & USA: US to introduce 25% tariffs on single malt Scotch and Irish malt whiskey

A number of key European Union drinks exports are set to face new tariffs in the U.S. market owing to a long-running dispute over aircraft subsidies. On October 2, the World Trade Organization ruled that E.U. subsidies to Airbus were illegal and allowed the U.S. to impose retaliatory tariffs on $7.5 billion worth of E.U. products, the Shanken News Daily reported.

The U.S. immediately made good on its threat to target several key import categories with tariffs. Beginning October 18, 25% levies will take effect on wine from France, Spain, Germany, and the U.K.; single malt Scotch whisky; Irish malt whiskey from Northern Ireland; and liqueurs from Germany, Ireland, Italy, Spain, and the U.K.

Cognac, Champagne, Italian wine, blended Scotch whisky, most Irish whiskies, and French liqueurs appear to have escaped unscathed for now, leading analysts like Jefferies to declare the measure “a light touch.” But while the levies may not be as severe or widespread as feared, U.S. industry groups are adamant that they will damage the drinks market—resulting in the loss of an estimated 13,000 U.S. jobs—and could lead the E.U. to further hike tariffs on key U.S. exports like American whiskey and California wine.

A joint statement from Distilled Spirits Council, the WSWA, the Wine Institute, and several others warned, “The U.S. action further ensnarls the distilled spirits industry in a trade dispute that began last year when the E.U. imposed a 25% retaliatory tariff on American whiskey in response to U.S. steel and aluminum tariffs.” Since then, American whiskey exports to the E.U. have declined by 21%, interrupting what had been a solid growth trend. The industry groups’ statement added, “The E.U. is considering imposing more tariffs on additional U.S. spirits and could raise them against U.S. wine as part of a separate WTO civil aviation subsidies dispute.”

“The decision to impose tariffs on imports of E.U. distilled spirits is a devastating blow to the U.S. spirits industry,” stated Chris Swonger, president and CEO of the Distilled Spirits Council of the U.S. “While we recognize the U.S. and E.U. are trying to solve longstanding trade disputes, distillers on both sides of the Atlantic have become collateral damage in matters that are completely unrelated to our industry. As the important holiday season approaches, we urgently call upon the U.S. and the E.U. governments to get back to the negotiating table and return to tariff free trade with our largest export market.”

04 October, 2019