EU Postpones 50% Tariff on US Whiskey Imports
The US whiskey industry is breathing a sigh of relief as US and EU officials struck a deal this week to postpone a 50% tariff that was set to take effect this year. Whiskey distilleries feared that the looming import tax would greatly damage their performance in a key market.
The European Union on Tuesday extended a suspension of tariffs on U.S. whiskey until March 31, 2025. The 50% levy was set to take effect in January as part of a steel and aluminum dispute. The decision was welcomed by both EU and US merchants.
US Welcomes EU Whiskey Tariff Postponement
“For the past two years, the United States and European Union have been engaged in critically important negotiations,” said U.S. Trade Representative Katherine Tai, who oversaw the deal. “Our goal is to forge a forward-looking arrangement that will allow us to join forces economically to incentivize fair and clean production and trade in the steel and aluminum sectors.”
According to an analysis by Distilled Spirits Council of the U.S, the US whiskey industry was punished with a 25% tariff resulting in a 20% reduction in exports. Between 2018 and 2021 the industry’s sales tumbled from $552 million to $440 million instilling fear of an impending tax hike to 50% due to take effect in 2024.
However, strong negotiations had suspended further tax hikes resulting in a 29% increase in exports to the EU in 2022. The US whiskey trade climbed to pre-dispute levels of $556 million.
“I am glad the EU has announced that it is taking steps to join us in extending the time for these negotiations and will follow our recommendation by continuing to suspend its tariffs on U.S. products,” Tai said.
The Council is also working behind the scenes to eliminate the tariff threat permanently, especially at a time when US whiskey consumption is on the decline. The organism has urged the current US president Joe Biden to take action to appease the EU onslaught.
“Until the threat of these tariffs returning is fully removed,” DISCUS President and CEO Chris Swonger said. “The uncertainty will continue to restrict American Whiskey export growth in our most important international market.”