The US whiskey industry is hoping that a trade war between the European Union (EU) and the US will be avoided as the Trump administration’s tariff on steel and aluminium could prompt retaliatory action.
Trump decided not to exempt the EU, Mexico and Canada from 25% and 10% tariffs on steel and aluminium, respectively. The duties were introduced today, leading the EU to open a case at the World Trade Organization (WTO).
In March, the EU threatened to slap retaliatory levies on American products such as Kentucky bourbon, heightening concern among US whiskey makers.
The Kentucky Distillers’ Association (KDA) said it “remains hopeful that continued negotiations will avoid a costly trade war and protect our allies and partnerships around the world”.
In a statement, KDA president Eric Gregory said: “The Kentucky Distillers’ Association has long been an advocate of free and fair trade which has catapulted our legendary craft into an unparalleled chapter of global success.
“Bourbon is a thriving $8.5 billion industry in Kentucky, generating 17,500 jobs with an annual payroll of $800 million. Spirits production and consumption pours more than $825 million into federal, state, and local tax coffers every year.”
The EU said that it will rebalance the Trump administration’s tariffs with additional duties on US products. The level of tariffs to be applied “will reflect the damage” caused by the new US trade restrictions on EU products. The duties could come into force as early as 17 June.
Spirits Europe said it is “greatly concerned” about the consequences of the steel and aluminium tariffs as it “opens an unfortunate chapter in the relationship between two major complementary trading blocs”.
In a statement, Spirits Europe said: “The EU and US spirits industries are long-term champions of open and fair trade. Our global success, built on free trade deals and zero-for-zero tariff agreements, has benefited consumers, agricultural communities, small businesses and government treasuries around the world.
“We have a long-standing record of working together with our respective governments to tackle trade barriers, improve market access and uphold the principles of the rules-based international trading system. We stand ready to continue working together to fight against the protectionism around the world in this challenging environment.”
In the first half of 2017, the value of US distilled spirits exports rose by 10.6% ($67 million) to reach a total value of $698.5 million, with whiskeys accounting for $464.6 million.
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