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Tariffs

EU-US Trade Agreement: Alcohol Tariffs Remain Uncertain

Strategic Insights

— 2 min read

European Union negotiators have been arguing for a zero percent tariff on wine and spirits exports to the United States as part of the ongoing trade agreement negotiations. However, despite weeks of negotiations, the American side has refused to budge on the issue, leaving European spirits producers facing a 15 percent tariff on exports. The written draft of the trade agreement is still under negotiation, but the lack of progress on an exemption for alcohol raises concerns for the industry, which has a significant customer base in the United States. President Trump and Ursula von der Leyen, the president of the European Union's executive branch, agreed to a trade deal that would apply 15 percent across-the-board tariffs to a range of products coming from the bloc's member countries into the United States.

Key Takeaways:

  • European Union negotiators have been pushing for a zero percent tariff on wine and spirits exports to the United States as part of the ongoing trade agreement negotiations.
  • The American side has refused to budge on the issue, leaving European spirits producers facing a 15 percent tariff on exports.
  • The 15 percent tariff would be a significant departure from nearly three decades of the industry facing no tariffs.
  • European producers have warned that the consequences of leaving alcohol tariffs at 15 percent could be grave, including an "extremely violent shock" to the industry.
  • The American liquor industry has also warned that the 15 percent tariff could affect businesses and jobs.
  • American spirits producers often worry that the European Union will hit them with retaliatory tariffs, which has happened before.
  • Many alcohol companies are multinationals with business lines that span national borders.
  • The Distilled Spirits Council of the United States has stated that a 15 percent tariff on E.U. spirits imports will intensify pressure on U.S. restaurants and bars.
  • Mary Taylor, the owner of Mary Taylor Wine, estimates that the new tariff is a third of her potential profits from shipments.

Statistics:

  • 15 percent: The proposed tariff on wine and spirits exports from the European Union to the United States.
  • 27: The number of countries in the European Union.
  • 15: The percentage of tariffs that President Trump had threatened to impose on European alcohol exporters at one point.
  • 200 percent: The high levies that President Trump had threatened to impose on European alcohol exporters at one point.
  • $40,000: The amount of tariffs paid by Mary Taylor on an order of wines from Europe.

Sources:

  • Reuters
  • White House official (anonymous)
  • Olof Gill, European Commission spokesman
  • Federation of French Wine and Spirits Exporters
  • Chris Swonger, President and CEO of the Distilled Spirits Council of the United States
  • Mary Taylor, owner of Mary Taylor Wine

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