DISCUS Reports Dangers of Renewed Spirits Tariffs

The Distilled Spirits Council of the United States (DISCUS) sounded an alarm over the potential return and doubling of the European Union’s retaliatory tariffs on American Whiskey in a comprehensive report submitted to the Office of the United States Trade Representative (USTR) identifying key foreign trade barriers impeding U.S. distilled spirits exports.

The report details the major trade barriers faced by U.S. spirits exporters around the world, including retaliatory tariffs, discriminatory taxes, regulatory standards, and certification and labeling measures.

Robert Maron, DISCUS Senior Vice President for International Trade Policy and Market Access, stated that the U.S. spirits sector’s top trade priority continues to be securing the permanent removal of the EU’s retaliatory tariffs on American Whiskey, rum, brandy and vodka.

The EU’s retaliatory tariff on American Whiskey as part of the steel-aluminum dispute is scheduled to be reimposed at 50% on March 31, 2025. The EU’s 25% retaliatory tariff on U.S. rum, brandy and vodka is scheduled to be reimposed on July 11, 2026, if there is no agreement with the EU on aircraft subsidies. Both tariffs are currently suspended.

“During the past two years that the EU’s retaliatory tariffs on American Whiskey have been suspended, U.S. whiskey exports to the EU surged by more than 60%, and total U.S. spirits exports grew to a record high of $2.2 billion in 2023,” Maron said in a news release. “If these retaliatory tariffs were to return, they would reverse this incredible and much needed rebound in U.S. spirits exports.”

The retaliatory tariffs on U.S. distilled spirits products had a devastating effect on exports while they were in place. Due to the imposition of the retaliatory tariff, American Whiskey exports to the EU, the largest American Whiskey export market, plunged 20%, from $552 million to $440 million (2018-2021).

Maron stated that elimination of import tariffs through various U.S. trade agreements has created a fair playing field for American spirits. In 2023, U.S. spirits exports to countries with trade agreements or zero duties amounted to $1.8 billion, making up 83% of the total exports of U.S. spirits.

We sounded alarm over the potential return & doubling of the EU’s retaliatory tariff on American Whiskey in a comprehensive report submitted to the @USTradeRep identifying key foreign trade barriers impeding US distilled spirits exports. #ToastsNotTariffs https://t.co/Whd3OjyBQr pic.twitter.com/yrmhH9m5cV
— Distilled Spirits Council of the United States (@DistilledSpirit) October 18, 2024

Other Countries

On the other hand, exports to countries with high tariffs, such as India (150% tariff), Vietnam (45% tariff), Thailand (60% tariff) and Brazil (20% tariff on all imported distilled spirits, except bulk whiskey, which has a 12% tariff) amounted to only $69.2 million, accounting for just 3% of the total U.S. spirits exports in 2023.

“U.S. spirits exports will face a competitive disadvantage if other major spirits producers like the UK and the EU continue to secure trade agreements that eliminate tariffs on their exports while the U.S. fails to negotiate similar deals,” Maron said. “Without reductions in tariffs, U.S. producers will likely see their products priced higher in international markets, making them less attractive compared to tariff-free alternatives from other countries.”

The DISCUS submission also identified countries that assess excessive tariffs, discriminatory excise taxes and other non-tariff barriers on imported distilled spirits, including:

EU, Brazil, Thailand, Indonesia, Peru and Costa Rica among others: continue to apply discriminatory spirits taxes or product markups in favor of domestically produced spirits.
Indonesia, Chile, EU, India, Malaysia, Thailand, Korea, Australia and elsewhere: labeling requirements and standards of identity are under consideration, which are inconsistent with standard international practices and could impose unnecessary barriers to entry for U.S. spirits exporters.