EU signals bourbon to be dropped from tariffs against US
Stéphane Séjourné, European commissioner for industrial strategy, has announced that tariffs against bourbon could be removed from the EU list of retaliatory tariffs against the US.
The aim of the tariff alleviation is to help to curb US tariffs on the European wine and spirits industry, with Séjourné telling France Inter radio that “the message went through [about] the major economic hit” for the sector.
The EU faces import tariffs of 25% for steel, aluminium and cars, as well as so-called reciprocal tariffs of 20% for all other goods, from Wednesday (9 April).
The EU had responded to the 25% tariff on steel and aluminium, first announced in March, with a suite of tariffs on US goods which included a 50% tariff on bourbon and other US spirits. In response to this retaliatory tariff, Donald Trump threatened a 200% tariff on EU alcohol exports to the US.
Although this 200% imposition has yet to materialise, the European drinks trade took the threat seriously, lobbying in Brussels for a more reconciliatory stance from the EU, leading to the touted exclusion of Bourbon from the tariff list.
De-escalation is also being sought by the spirits trade across the pond. Chris Swonger, president of the US-based Distilled Spirits Council, speaking in March after the EU’s 50% tariff on Bourbon was announced, was very keen to see previous trade arrangements for the drinks trade return.
He commented: “We urge President Trump to secure a spirits agreement with the EU to get us back to zero-for-zero tariffs.”
This is nod to the pre-2018 tariff arrangement that had existed since 1997, where the EU and US had reciprocal tariff-free trade on spirits. Also of note is that 86% of US exports go to countries that have eliminated tariffs on American alcohol products, illustrating why so many in the drinks trade see the inclusion of alcoholic products in tariff arrangements as unnecessary.
In light of last night's (8 April) escalatory introduction of 104% US tariffs on some Chinese goods, it remains to be seen how the continuing trade standoff between the US and its trading partners could further impact the European and US drinks trade.
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