On 12 August, the US published an updated list of EU products that will face additional tariffs from 1 September 2020, in retaliation for aircraft subsidies. USTR decided to maintain a 25% tariff on non-aircraft products. For spirits, nothing changed: no additional spirits were added to the list, and the applicable rate for affected spirits remains the same (25%). Still, this means that the sector is still caught up in a trade dispute about civil aircraft, totally unrelated to spirits, at a time when the focus should be on recovering from the Covid-19 related crisis.
We cannot highlight enough the damaging effect tariffs have on spirits on both sides of the Atlantic, when compared with the previous tariff-free situation we enjoyed for many years prior to 2018. Following the imposition of EU tariffs in 2018, US whiskey exports to the EU have declined by 33%.[1]
The combined effect of tariffs and the Covid-19 crisis is impacting on jobs, from production to retail, hospitality and supply chain on both sides, and we see declines in productivity, competitiveness and growth. We need an urgent return to the “zero-for-zero” agreement: the current economic crisis makes this all the more pressing.
Together with 13 European associations representing affected sectors, spiritsEUROPE has called on the EU and US to de-escalate the ongoing aircraft disputes and remove tariffs on targeted sectors not directly related to the aircraft case as a matter of urgency.
While the EU-US agreement concluded on 21 August neither includes spirits nor provides a solution to the ongoing trade dispute, we hope that it will pave the way for further tariff reduction, a fast resolution of ongoing disputes and a return to the zero-for-zero agreement for spirits.
[1] (May 2019-April 2020 growth compared with the July 2017 – June 2018 period, when US spirits incurred no tariffs upon import in the EU).
