Distilled Spirits Council - European Union Agrees to Delay June 1, 2021 Deadline of 50% Retaliatory Tariffs on American Whiskey

Retaliatory tariffs of 25% were slapped on imports of American Whiskey and Bourbon into the EU back in mid-2018. Since then U.S. spirits exports were down 23% to $1.4 billion. American Whiskey exports were down 29% to 846 million during the same period.

Those tariffs were scheduled to double to 50% on June 1, 2021 if nothing happened. Distillers and their representatives across the U.S. have been fighting to have those new tariffs stopped and the old tariffs removed. Though the existing tariffs are still in place the looming doubling from 25% to 50% tariff has temporarily been halted.

June 1, 2021 Doubling of Tariffs Narrowly Averted

“This news couldn’t come soon enough,” said President and CEO of the Distilled Spirits Council of the United State – DISCUS Chris Swonger. “Distillers across the United States are breathing a huge sigh of relief after bracing for a 50 percent tariff on American Whiskeys in just a matter of days that would have forced many craft distillers out of the EU market.

Distilled Spirits Council - U.S. Export Growth Before and After EU and UK Tariffs

“We recognize there is still work to be done to get EU and U.S. spirits back to zero for zero tariffs. We greatly appreciate the Biden administration’s ongoing efforts to resolve these longstanding trade disputes and reduce the economic pain felt by those industries unfairly caught in the middle.”

“This is welcome news as distillers in Kentucky and across America were perilously close to a crippling blow on European exports,” Kentucky Distillers’ Association President Eric Gregory said. “This gives both sides some breathing room to return to free and fair trade and once again level the playing field for Kentucky’s signature spirit.

“We deeply appreciate the leadership the Biden Administration, Congressmen John Yarmuth and Andy Barr, Kentucky Gov. Andy Beshear and all global leaders who are working to resolve this ongoing trade dispute that has slashed exports and jeopardized the certainty of our largest overseas markets.”

Tariffs imposed on U.S. spirits slashed Kentucky Bourbon exports by 35% in 2020, with shipments to the European Union plummeting by nearly 50%. Sales to the U.K., formerly Kentucky’s largest market in the EU, also have been decimated by 50%.

Distilleries in 36 states exported whiskey in 2020, with Tennessee ranking first followed by Kentucky. Total American Whiskey exports reported a similar downturn, declining 29% from 2018 to 2020. U.S. whiskey exports to the EU fell sharply 37% in that time and sank 53% to the U.K.

“We are obviously thrilled that discussions have started and both sides are committed to resolving this issue by the end of the year,” Gregory 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.”

As we mentioned above these tariffs have nothing to do with American Whiskey or Bourbon. The retaliatory tariffs are about steel and aluminum. Here is joint statement from the United States-European Union.

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Joint United States-European Union Statement on Addressing Global Steel and Aluminum Excess Capacity

United States Trade Representative Katherine Tai, U.S. Secretary of Commerce Gina M. Raimondo, and European Commission Executive Vice President Valdis Dombrovskis today announced the start of discussions to address global steel and aluminum excess capacity. During a virtual meeting last week, the leaders acknowledged the need for effective solutions that preserve our critical industries, and agreed to chart a path that ends the WTO disputes following the U.S. application of tariffs on imports from the EU under section 232.

Ambassador Tai, Secretary Raimondo, and Executive Vice President Dombrovskis acknowledged the impact on their industries stemming from global excess capacity driven largely by third parties. The distortions that result from this excess capacity pose a serious threat to the market-oriented EU and U.S. steel and aluminum industries and the workers in those industries. They agreed that, as the United States and EU Member States are allies and partners, sharing similar national security interests as democratic, market economies, they can partner to promote high standards, address shared concerns, and hold countries like China that support trade-distorting policies to account. 

They agreed to enter into discussions on the mutual resolution of concerns in this area that addresses steel and aluminum excess capacity and the deployment of effective solutions, including appropriate trade measures, to preserve our critical industries. To ensure the most constructive environment for these joint efforts, they agreed to avoid changes on these issues that negatively affect bilateral trade.   They committed to engaging in these discussions expeditiously to find solutions before the end of the year that will demonstrate how the U.S. and EU can address excess capacity, ensure the long-term viability of our steel and aluminum industries, and strengthen our democratic alliance.

Brown-Forman Statement About the Tariffs

We are encouraged by today’s agreement between the U.S. and the EU to avoid the doubling of tariffs on American whiskey. We applaud the Biden Administration and its EU counterparts for this positive step forward. However, American whiskey still remains subject to 25% retaliatory tariffs in the EU and UK. We remain hopeful that the negotiators will build on the progress that’s been made and ultimately secure a removal of tariffs on American whiskey.

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