EU and U.S. reach agreement to avert 50% tariff on whiskey exports to Europe.

• An agreement was reached between the U.S. and EU to prolong a pause on EU tariffs for American whiskey.
• From January 1, 2022, a 50% levy will be imposed, and the suspension will continue until March 31, 2025.
• Concerns among U.S. whiskey distillers that the tariffs might negatively affect their operations in a significant market.

European whiskey importers are relieved that they will not face a 50% tax on shipments from the US.

The European Union announced on Tuesday that it would postpone the imposition of a 50% tariff on U.S. whiskey until March 31, 2025. This decision was made in the context of the ongoing steel and aluminum dispute between the U.S. and the European bloc.

U.S. Trade Representative Katherine Tai stated that the United States and European Union have been engaged in critical negotiations for the past two years, with the aim of establishing a forward-looking arrangement that will encourage fair and clean production and trade in the steel and aluminum sectors.

In 2018, American whiskey makers were caught in a trade dispute between the US and the EU. The dispute began when former President Donald Trump imposed tariffs on steel and aluminum, prompting the EU to respond with taxes on various US products. The EU aimed to put pressure on politicians in Republican and swing states through this trade war.

The EU initially imposed a 25% tariff on American whiskey, resulting in a 20% decline in exports from 2018 to 2021, dropping from $552 million to $440 million, as per analysis by the Distilled Spirits Council of the U.S.

The suspension of the measure occurred in October 2022 as part of an agreement to pause the implementation of increased U.S. metals tariffs and EU levies until January 1, 2023. If implemented, the tariffs would have doubled to 50%.

In 2022, American whiskey exports to the EU rose by 29% compared to the previous year, reaching pre-trade dispute levels of $566 million.

Tai expressed satisfaction that the EU has decided to prolong the negotiations and will adhere to their recommendation by maintaining tariff suspensions on US goods.

The E.U. requires the U.S. to prolong the suspension of steel and aluminum tariffs in order to fulfill the agreement.

DISCUS also urged President Joe Biden to negotiate an end to tariff disputes.

The uncertainty of tariffs returning will continue to restrict American Whiskey export growth in our most important international market, according to DISCUS President and CEO Chris Swonger.

‘Whiskey River’ runs dry

At a time when American whiskey is losing market share, the deal is good news for whiskey makers.

American whiskey's popularity is declining among consumers, and in 2022, agave-based spirits like tequila and mezcal surpassed whiskey as the second-fastest growing spirits category in the U.S. according to DISCUS analysis.

The first half of Jack Daniel's and Woodford Reserve's current fiscal year saw weak whiskey sales.

While the company's whiskey sales decreased by 2% annually, its tequila sales increased by the same percentage.