EU wine, spirits to face 15% US tariff from Aug 1, EU says

Straits Times

4 days ago

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The US tariff on European wine and spirits will rise to 15 per cent, from the current 10 per cent.
BRUSSELS - European wine and spirits will face a
15 per cent US import tariff until a different deal is agreed in talks expected to continue in the autumn, the European Commission and EU diplomats said on July 31, dashing producers' hopes of an immediate reprieve.
A framework trade deal between Brussels and Washington on July 27 agreed a 15 per cent tariff for most EU imports into the United States, although some sectors were expected to be exempted.
The US tariff on European wine and spirits is currently 10 per cent.
Brussels is keen to reduce that to zero or, for wine at least, to the Most Favoured Nation (MFN) rates that are set on a fixed cost per litre basis, rather than in percentage terms.
'The Commission remains determined to achieve and secure the maximum number of carve-outs including for traditional EU products such as wine and spirits,' Commission spokesperson for trade Olof Gill told a news conference.
'It is not our expectation that wine and spirits will be included as an exemption in the first group announced by the US tomorrow. And therefore that sector will be captured by the 15 per cent ceiling,' he said.
Wine-makers said the tariff, even if temporary, would hurt the sector, especially when combined with the stronger euro.
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'The 15 per cent duty on EU wines, even if applied for some months until the negotiations are closed, would cause significant economic losses not only for EU wine producers but also for US businesses involved throughout the supply chain,' said Mr Ignacio Sanchez Recarte, secretary general of European wine producers group CEEV.
'When combined with the currency shift in the USD/EUR exchange rate, the overall financial burden on the sector could reach 30 per cent. Investments will be halted and export volumes will decline while waiting for the final agreement,' he said.
The US is to publish an executive order on Aug 1, implementing the framework trade deal that was agreed on Sunday between US President Donald Trump and European Commission President Ursula von der Leyen.
Separately, the EU and the US are set to publish a joint statement in the coming days spelling out the details of the framework deal.
A senior diplomat close to the negotiations told Reuters that talks on wine and spirits tariffs would continue after the EU and US finalise their joint statement.
'(This will take place) probably in the autumn,' the diplomat said.
Until recently, spirits had benefited from zero tariffs between the US and EU following an agreement in 1997 that also included other countries such as Canada and Japan.
That lasted until 2018, when the EU response to US steel and aluminium tariffs included increased duties on US bourbon and other spirits. These were suspended in 2021.
US MFN rates for wine are 19.8 cents per litre for sparkling and 6.3 cents per litre for most other wine, which equates to very low rates in most cases.
The EU has already envisaged a quota system for steel exports with US MFN rates, which are very low or at zero. REUTERS