EU, U.S. strike deal to avoid 50% tariff on exports to Europe

In good news for the many U.S. whiskey producers, the U.S. and EU reached a last minute-agreement to extend a suspension of EU tariffs on American whiskey.

A 50% levy was set to take effect on January 1, 2024. Under the new agreement, this latest suspension will last until March 31, 2025.

U.S. whiskey distillers worried the tariffs could hamper their business in a key market.

The 50% levy, which came in the context of a broader steel and aluminum dispute between the U.S. and the European Union, was set to take effect this month.

In a timeline published by the Distilled Spirits Council of the U.S., the tariffs were part of a trade dispute that began in 2018 after former President Donald Trump imposed (U.S. Section 232) tariffs on steel and aluminum. The European Union retaliated with a 25% tariff on American whiskeys and other U.S. products.

American whiskey producers got a reprieve from a 50% tariff under the new deal with the EU.

Due to the imposition of the retaliatory tariff, American Whiskey exports to the EU plunged 20% between 2018 and 2021, from $552 million to $440 million, says DISCUS. The EU is the largest American Whiskey export market.

In October 2022, the U.S. and EU mutually agreed to suspend the U.S. metals tariff and the EU’s 25% retaliatory tariff on American Whiskeys for two years starting January 1, 2022. If not renegotiated, the tariffs would have doubled to 50%.

Through October 2023 (latest data available), American Whiskey exports to the EU are up nearly 64% as compared to the same period in 2022 (January-October), reports DISCUS.

Which is why the European Union’s announcement in December that it would extend the suspension of tariffs on U.S. whiskey until March 31, 2025, was so important to U.S. whiskey producers.

In order to fulfill the agreement, on Dec. 28, 2023 President Biden signed two Presidential Proclamations extending the suspension on steel and aluminum for two more years.

According to the statement by U.S. Trade Representative Katherine Tai, who oversaw the deal, the extension, combined with the EU’s continued suspension on tariffs on U.S. goods, will provide additional time to negotiate a global arrangement to address carbon intensity and non-market capacity in the steel and aluminum industries.

According to the White House statement, the current extension of the suspension on steel and aluminum took effect on January 1, 2024, and will last until December 31, 2025.

In a statement issued by the Distilled Spirits Council, President & CEO Chris Swonger said:

“We greatly appreciate the efforts of the Biden administration to secure an extended suspension of the EU’s retaliatory tariffs on American Whiskeys. This agreement is welcome news for U.S. distillers across the country who were facing the reimposition and doubling of the EU tariff to 50% in the new year.”

Swonger also urges the Biden administration to permanently end all “debilitating” tariffs, and added:

“The U.S. distilled spirits industry has worked hard to regain its footing in the EU market since the EU suspended its 25% retaliatory tariff on American Whiskeys in January 2022. The U.S. spirits industry has seen positive results, with American Whiskey exports to the EU bouncing back to surpass pre-tariff levels.

“This extended tariff suspension allows U.S. spirits exporters to continue their efforts to highlight the unique quality, tastes and versatility of American spirits in the EU market.”