EU slaps 25% tariffs on rum and vodka from US

The European Union has imposed tariffs on an additional US$4 billion worth of US goods, including rum, vodka, brandy and vermouth.

The latest tariffs were authorised by the World Trade Organization (WTO) last month, sanctioning the European Union (EU) to impose tariffs on almost US$4 billion worth of US products.

The new measures, which came into force today (10 November), include 25% tariffs on rum, brandy, vodka and vermouth from the US.

Valdis Dombrovskis, the EU executive vice-president for an economy that works for people and commissioner for trade, said: “We have made clear all along that we want to settle this long-running issue. Regrettably, due to lack of progress with the US, we had no other choice but to impose these countermeasures.

“The EU is consequently exercising its legal rights under the WTO’s recent decision. We call on the US to agree to both sides dropping existing countermeasures with immediate effect, so we can quickly put this behind us.

“Removing these tariffs is a win-win for both sides, especially with the pandemic wreaking havoc on our economies. We now have an opportunity to reboot our transatlantic cooperation and work together towards our shared goals.”

The trade war between the EU and US stems from a 16-year dispute between aircraft manufacturers Airbus and Boeing. In 2004, the US took the EU to the WTO over subsidies to European plane maker Airbus, and the EU retaliated with a case against the US over support for American manufacturer Boeing.

In 2019, the US implemented tariffs on US$7.5bn worth of EU goods, including single malt Scotch and single malt Irish whiskey.

Since these tariffs were imposed, the global drinks industry has witnessed a 34% decline in Scotch Whisky exports and a 28% decline in liqueur and cordial exports.

Similarly, a 25% tariff on Bourbon and US whiskey announced by the EU in June 2018 led to a 41% decline in American Whiskey exports to the EU.

Increased tensions 

A coalition of trade bodies, including the Distilled Spirits Council of the US (Discus) and the Scotch Whisky Association (SWA), have warned the additional measures enforced today “will further degrade the difficult situation the wines and spirits industries have been facing”.

The group of 20 trade associations published a statement yesterday (9 November) arguing that further EU tariffs on American spirits would “increase the tensions” between the US and EU.

“The application of excessive and unwarranted tariffs has to end,” the coalition of trade bodies said in a statement. “Hospitality businesses and our consumers, as well as producers, wholesalers and importers of distilled spirits, wine, and beer are being slammed from both sides of the Atlantic in an aircraft dispute wholly unrelated to the drinks business. This is on top of the closings of restaurants, bars, distilleries and winery tasting rooms because of the Covid-19 pandemic.”

The coalition warned the tariffs could force more businesses to close and lay off more workers in sectors already severely weakened due to the coronavirus pandemic.

The statement continued: “The US and EU need to return to the negotiating table without delay. They need to immediately suspend the current tariffs as they negotiate an agreement to simultaneously eliminate additional tariffs on distilled spirits and wine in these disputes unrelated to the sector.”

The coalition of trade bodies comprises: Discus, Spirits Europe, SWA, Comité Européen des Entreprises Vins, Wine Institute, American Beverage Licensees, Wine America, Wine & Spirits Wholesalers of America, National Retail Federation, American Craft Spirits Association, American Distilled Spirits Alliance, US Wine Trade Alliance, National Council of Chain Restaurants, Kentucky Distillers’ Association, National Restaurant Association, National Association of Beverage Importers, National Association of Wine Retailers, The Wine and Spirit Trade Association, Napa Valley Vintners, and Wine and Spirits Shippers Association.

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Author: Owen Bellwood

Timothy Kelly

Tim is the Founder & Master Distiller at Felene. He developed his passion for the spirits and hospitality business while growing-up and working in his family's restaurant and liquor store business. Tim’s passion for the epicurean lifestyle has found it’s latest manifestation in the Felene Distillery. Tim is a 5-time Gold Medal Award winning Distiller. He has won a Platinum medal at the Prestigious Los Angeles Spirits Awards and his signature vodka was named Best-in-Category by the American Distilling Institute. Mr. Kelly is also a prolific author and writer and his blog is filled with ideas, discoveries, observations and recommendations to help his readers enjoy life’s simple epicurean pleasures.

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