American Whiskey Industry Facing Crippling 50 Percent EU Tariff Starting in January

If you live in the EU, and love American Whiskey, whether its Bourbon, Tennessee Whiskey, or any whiskey from the U.S., your favorite bottle is about to become much more expensive when a 50% tariff is imposed starting January 1st, 2024.

In 2018, President Donald Trump, as part of his Buy American economic policy, and citing a U.S. Section 232 investigation, imposed a 25% tariff on steel and a 10% tariff on aluminum. In retaliation, the EU imposed a 25% tariff on American Whiskey, along with a number of other American products totaling $3.3 billion worth of goods.

The tariffs have resulted in a significant economic damage to businesses on both sides of the pond, with American whiskey exports to the UK declining by 53% between 2018 and 2020 resulting in negative impacts on the job market throughout the whiskey production supply chain from distilleries, to glass manufacturers, grain producers, and more.

On October 31st, 2021, the US and EU agreed to temporarily suspend the tariff on EU imports as of January 2022, but the tariff still exists on UK imports (more on that below).

At the U.S.-EU presidential Summit held in Washington, DC on October 20th, 2023, the parties failed to reach an agreement that would see an extension to the suspension, or have the tariff permanently removed. As a result, the tariff on whiskey imports into the EU will be re-imposed, and doubled to 50% on January 1st, 2024.

Chris Swonger, president and CEO of the Distilled Spirits Council of the US (DISCUS) put out a statement urging the Biden administration to resolve this issue and have the tariff permanently removed. The statement, in part read:

“Since the EU suspended its 25% retaliatory tariff on American Whiskeys in January 2022, American Whiskey exports to the EU have bounced back and surpassed pre-tariff levels. The U.S. distilled spirits industry has worked hard to regain its footing in the EU market and a return of the tariffs would bring this positive momentum to a screeching halt.

We urge the Biden Administration to continue to prioritize the permanent removal of these debilitating tariffs. Until the threat of tariffs returning is fully removed, the uncertainty will continue to restrict our growth in our most important international market.”

Clearly, reinstating and doubling of the tariff will have significant negative impacts on the American whiskey industry. Since the tariff was suspended, American whiskey exports to the EU have surged, surpassing pre-tariff levels.

In 2018, American whiskey exports to the EU were worth $552 million. By 2021 exports had declined to $440 million, a drop of 20%. Since the tariff was suspended, exports to the EU have risen 29%, surpassing pre-tariff levels to $556 million in 2022. Whiskey exports to the EU are on track to grow even more in 2023, and are currently up almost 91% compared to the same period last year (January to August).

The American whiskey industry will continue to be negatively affected until this devastating tariff costing millions of dollars in lost revenue is removed.

Tariff on UK Whiskey Imports

Unfortunately, the tariff on whiskey exports to the UK is still in place. This tariff is part of a 17-year trade dispute over government subsidies provided to Boeing and Airbus.

In June of 2021, President Joe Biden and EU leaders came to an agreement to resolve the Boeing-Airbus dispute. Under the agreement, the EU agreed to suspend a 25% tariffs for 5 years on U.S. rum, brandy and vodka that was imposed in November 2020.

In return, the U.S. suspended the 25 percent tariffs on:

• liqueurs and cordials from Germany, Ireland, Italy and Spain and certain wines from Germany, France and Spain imposed in October 2019
• certain Cognacs and other grape brandies from France and Germany imposed in January 2021

However, the 25% tariff on whiskey remained in place in connection with the trade dispute over steel and aluminum.

The American whiskey industry thrived under tariff-free with the UK from 1997 – 2018. The UK market is one of the most important export markets for American whiskey, and the industry will continue to see negative impacts until the tariff is removed.