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May 30, 2022 View:

Several foreign associations call on US to stop raising tariffs on alcohol

On January 12, 2021, new U.S. tariffs of 25% on cognac, other grape cognacs and non-sparkling wines from France and Germany went into effect. In response, 72 U.S. and EU trade associations sent a joint letter to President Biden and European Commission President von der Leyen seeking an immediate halt to reciprocal tariffs unrelated to the steel, aluminum and aircraft disputes and to rebuild trade relations between the U.S. and the EU.

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On January 20, 2021, current U.S. President Joe Biden officially takes the White House. The world is watching for possible changes in Washington. Obviously President Biden has a lot of work to do with the ongoing pandemic of Newcastle pneumonia, the delayed vaccine rollout and the stagnant U.S. economy, but for many distillers, breweries, importers, exporters, restaurant and bar owners, and consumers, they most expect the new Biden administration to repeal the new tariffs on alcoholic beverages.

The cognac industry is calling on French and European authorities to get in touch with the new U.S. administration about tariffs as soon as possible, said Laurine Caute, spokeswoman for France"s National Authority for the Cognac Industry (BNIC). Cognac alone has created 60,000 jobs in France. We should all come to our senses and end this dispute.

The United States is Cognac's largest export market. According to the French National Authority of the Cognac Industry, Cognac exports to the U.S. will be 103.5 million bottles in 2020, up 1% from 2019, despite the New Crown pneumonia pandemic.

The concern extends far beyond France, with alcohol producers throughout Europe as well as the United States feeling the pinch. The new tariffs have slowed sales of spirits and wine on both sides of the Atlantic, and have also raised prices and reduced consumer purchases. According to the Distilled Spirits Council of the United States (DISCUS), the alcohol trade war has led to a 39 percent drop in imports of Scotchland whisky, while U.S. whisky exports to the European Union have plummeted 41 percent. The EU is the largest export market for U.S. whiskey.

Robert Maron, vice president of international trade for the Distilled Spirits Council of the United States, said such tariffs would add to an industry already deeply affected by the outbreak. Many of the large U.S. whiskey exporters are also large importers of Cognac and Scotch whisky, he said. So when the U.S. and EU impose these tariffs, they usually hit their own companies as well. When tariffs are imposed on imports from the EU, they also affect the entire U.S. service industry, and of course the shutdown during the epidemic had a more severe impact on that.

Malone mentioned that the increased tariffs will ultimately be paid for by consumers. Most troubling for U.S. whiskey consumers, especially those in the EU, is that EU tariffs on U.S. whiskey will increase to 50 percent in June 2021 if the steel and aluminum dispute is not resolved.

A spokesman for the Scotch Whisky Association (SWA) believes that it is particularly unfair to involve distillers in a dispute over subsidies for aircraft manufacturers. The spokesman said that the tariffs have caused a loss of 450 million pounds ($617 million) in exports of single Scotch whisky to the United States over the past 15 months, and the losses will continue to climb.