The European Union imposes additional tariffs on American spirits and small artisanal distillers are taking a hard hit.
The new measures come in retaliation for an ongoing dispute between the US and the EU over aircraft manufacturing subsidies, which has pushed the beverage industry into a trade war it has nothing to do with. see. The new tariffs will apply to $ 4 billion of products made in the United States, including tariffs of 25% on vodka, rum, brandy and vermouth from the United States.
The most recent collateral damage from the years-long trade war couldn’t come at a worse time for America’s small artisanal stills struggling to stay open in the pandemic, according to the Chairman and CEO of the Distilled Spirits Council from the United States, Chris Swonger.
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“This industry was experiencing great growth and prosperity prior to the first tariffs imposed in June 2018,” Swonger told FOX Business. “The EU and the US are long-standing trading partners and allies, and there is no reason why this industry should be involved in tariff and trade disputes over steel, aluminum and aircraft parts. “
In addition to a trade battle unrelated to the spirits industry, the challenges of the pandemic have forced many distillers to close and suffer revenue losses due to the closure of restaurants, bars and taprooms. On-site sales from places like bars and restaurants account for almost 20% of the business of distillers and also provide distribution channels to consumers.
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For Kóloa, a local craft distillery in Hawaii, tariffs hit as its first shipment of rum to the EU is being prepared to go overseas. After 70% of Kóloa’s income disappeared when COVID-19 hit Hawaii, with the tasting room closing and the dive into tourism, the significant drop in its domestic sales made its exports to international markets again more critical.
“The importance of our initiative to send rum to Europe has been magnified by covid and the impact it has had on our business,” Bob told FOX Business. “The pandemic has had a particular impact in Hawaii because we are so remote and isolated and dependent on the visitor industry. It is clear that the imposition of a 25% tariff. 100 will not help. The timing of all of this is extremely unfortunate.
The distilled spirits industry in the United States and the European Union is begging the government administration of the EU and the United States to come to the negotiating table, highlighting the damage that the tariff wars have caused to the wine and spirits industry.
For example, since the EU levied a 25% tariff on US whiskey in June 2018 in response to the Trump administration’s tariffs on steel and aluminum, exports of US whiskey to the EU have decreased by 41%. The sanctions have hampered the growing US whiskey export market, which accounted for 65% of all US spirits and exports in 2019. The EU is the largest export market for US whiskey, accounting for 52% of total US exports of whiskey.
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In fact, the EU is the largest export market for American distilled spirits. In 2019 alone, total US spirits exports to the EU accounted for 40% of total US spirits exports and reached $ 602 million.
“The craft distillation industry is emblematic of America’s great success story,” the Distilled Spirits Council of the United States Swonger told FOX Business. “It has increased over the past 12 to 15 years, and that is now being held back by the threat of tax increases, tariffs and the pandemic. Many artisanal stills may not be able to survive. “
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