American distillers are ringing bells not only for the joy of the season but for the relief that a 50% European Union tariff scheduled to take effect on January 1, 2024 has been delayed to March 31, 2025.
The retaliatory tariffs on American whiskey which have been temporarily halted were set to double to 50% on January 1, 2024, which would have caused a devastating blow to the American spirits industry.
In a statement from the Kentucky Distillers’ Association – KDA the trade dispute that provoked these retaliatory tariffs has nothing to do with the Kentucky Bourbon or American whiskey industry. U.S. and E.U. spirits exporters had enjoyed duty-free access to each other’s markets for more than two decades, which had greatly benefited both spirits producers and consumers, and resulted in increased exports, jobs, and consumer choice. The tariffs were about an aluminum and steel issue (more details below).
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The KDA strongly urges E.U. and U.S. officials to permanently end the tariffs sooner than later. The industry has worked hard to recover and regain footing from the last short-term suspension of tariffs. As bourbon takes years of aging to perfect, a permanent solution will bring certainty to distillers as they look to continued growth and investments in international markets.
“We appreciate and applaud the efforts of the Biden administration and Kentucky Gov. Andy Beshear to secure the extended suspension of the tariffs,” said KDA President Eric Gregory. “We look forward to the day when we can return to free and fair trade and our main business of making the world’s finest whiskey.”
The Distilled Spirits Council of the United States – DISCUS also put out a statement thanking the Biden administration for working with the EU to delay these tariffs for at least another 15 months.
“We greatly appreciate the efforts of the Biden administration to secure an extended suspension of the EU’s retaliatory tariffs on American Whiskeys,” said Distilled Spirits Council President & CEO Chris Swonger. “This agreement is welcome news for U.S. distillers across the country who were facing the re-imposition and doubling of the EU tariff to 50% in the new year.
“We urge the Biden administration to continue striving for a permanent end to all debilitating tariffs in disputes unrelated to the spirits sector. Until the threat of these tariffs returning is fully removed, the uncertainty will continue to restrict American Whiskey export growth in our most important international market.
“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.”
American Whiskey Rebound after Removal of Tariffs in 2022
American Whiskey exports to the EU increased by 29% in 2022 compared to 2021 after the suspension of tariffs, reaching $566 million in 2022. This accounted for 44% of all American Whiskey exports, surpassing the pre-tariff level of $518 million in 2017.
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).
Background on U.S./EU Tariff Dispute
The tariffs being imposed on American Whiskey has nothing to do with American Whiskey. These are retaliatory tariffs because of an aluminum and steel industry dispute.
- In June 2018, the EU imposed a 25% retaliatory tariff on American Whiskeys in response to U.S. Section 232 tariffs on steel and aluminum.
- Due to the imposition of the retaliatory tariff, American Whiskey exports to the EU, our largest American Whiskey export market, plunged 20%, from $552 million to $440 million (2018-2021).
- In October 2022, the U.S. and EU agreed to suspend the EU’s 25% retaliatory tariff on American Whiskeys for two years starting January 1, 2022.
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