Why the Booze Tariff Wars Will Never End

Stop if you’ve heard this before: The U.S. is slapping new tariffs on spirits in retaliation for a deal completely unrelated to alcohol.

According to The Spirits Business, certain Cognacs, grape brandies and wine from France and Germany will see a 25% duty rate starting on January 12. This is a response to a European Union’s 25% tariff introduced in November of 2020 on rum, vodka, brandy and vermouth from the U.S.

That increase came immediately after a 25% tariff on single malt Scotch, single malt Irish whiskey and liqueurs from the E.U. was kicked off here in October of 2019.

According to the Office of the United States Trade Representative, the E.U.’s most recent tariffs came about because they “used trade data from a period in which trade volumes had been drastically reduced due to the horrific effects on the global economy from the COVID-19 virus.” In that office’s mind, Europe imposed tariffs on “substantially more products than would have been covered if it had utilized a normal period.” So the U.S. responded to keep the actions “proportionate.”

These tariffs have a real effect. As noted by The Spirits Business, Scotch exports declined year-to-year by 34% between October 2019 (when the U.S. introduced the 25% tariff) and August 2020, although the pandemic certainly skewed numbers.

So … why are we doing this?

This all dates back to 2004 (!) and has nothing to do with alcohol. It’s part of a tit-for-tat dispute, approved by the World Trade Organization, that began as part of a penalty against an EU subsidies program for the aircraft company Airbus. Apparently, actions by Airbus this past summer that hopefully would have ended the dispute were for naught.

The Distilled Spirits Council issued this statement regarding the just-announced tariffs:

We are extremely disappointed that the U.S. has announced it will impose more tariffs on additional categories of imports of EU distilled spirits in connection with the civil aircraft subsidy disputes, including certain Cognacs and other non-grape brandies. These tariffs not only harm EU spirits producers, they also disrupt and negatively impact the entire U.S. hospitality industry supply chain.

Hospitality businesses and our consumers, as well as producers, wholesalers and importers of distilled spirits are collateral damage in a dispute wholly unrelated to the drinks business. These tariffs are continuing to have a devastating impact on our businesses, which are also suffering due to the closings of restaurants, bars, and distillery tasting rooms because of the COVID-19 pandemic. We continue to urge the EU and the US to negotiate an agreement that will end the excessive and unwarranted tariffs on distilled spirits across the Atlantic without any further delay.”