U.S. and E.U. Agree to Drop Tariffs on Most Alcoholic Beverages for 5 Years

A 16-year trade dispute between the U.S. and E.U. over respective subsidies to Boeing and Airbus will take a five-year hiatus thanks to an agreement announced yesterday. That's good news for many in the alcohol industry as retaliatory tariffs on wines and spirits had turned aerospace into a surprisingly relevant topic. But this pact doesn't provide relief for everyone: No longer an E.U. member, the U.K. is still awaiting its own deal, and a separate ongoing dispute over steel and aluminum means that American whiskey tariffs will remain in place.

Traction had already been made earlier this year when the U.S. announced a four-month pause in the aerospace tariffs with both the U.K. and the E.U. back in March. This latest agreement tacks a far more substantial five years onto that suspension with the E.U., and CNBC reports that the U.K. is hoping to have a similar agreement in place within days.

Assuming both agreements come together, existing 25 percent tariffs will be dropped on alcoholic beverages such as swaths of wines coming from France, Germany, Spain, and the United Kingdom (including stronger wines from France and Germany that were added in January, putting Cognac and brandy into the mix), both Scotch and Irish whiskies, and liqueurs from Germany, Ireland, Italy, Spain, and the United Kingdom. (Also relevant, plenty of food products will also see their tariffs dropped such as Spanish olives and Italian cheeses.)

Meanwhile, spirits producers in the United States will also benefit as their products will see tariffs lifted across the Atlantic. American rum, brandy, vodka, and vermouth will all no longer be subject to respective 25 percent tariffs in Europe.

Industry groups immediately praised the decision. "The five-year suspension of these tariffs on distilled spirits is happening at a critical time for the U.S. hospitality industry. We appreciate the Biden administration's work to reset relationships with our trade allies," Chris Swonger, president and CEO of the Distilled Spirits Council, stated. "Lifting this tariff burden will support the recovery of restaurants, bars and small craft distilleries across that country that were forced to shut down their businesses during the pandemic."

However, one major sector of the American spirits business is feeling left out in the cold: whiskey. American whiskey is also subject to a 25 percent tariff in Europe, but those retaliatory tariffs are tied to a separate trade dispute: Trump's 2018 steel and aluminum tariffs. "This agreement is good news for spirits producers who have been hammered by tariffs in recent years, but we need to remove the tariffs on American whiskey," American Distilled Spirits Alliance President and CEO Matt Dogali stated. "Until those tariffs are addressed, both producers and consumers of American whiskey will continue to be negatively impacted."

However, relief for American whiskey appears to be in the cards. A joint statement from the U.S. and E.U. explained that they "will engage in discussions to allow the resolution of existing differences on measures regarding steel and aluminum before the end of the year."