BRUSSELS (Reuters) -European wine and spirits will face a 15% tariff when entering the United States from Aug 1, until negotiators from both sides agree a different deal, in talks that are expected to
EU Wine and Spirits to Face 15% Tariff in US Starting August 1
Impact of New Tariffs on EU Wine and Spirits
By Jan Strupczewski and Julia Payne
Economic Consequences for Producers
BRUSSELS (Reuters) -European wine and spirits will face a 15% U.S. import tariff until a different deal is agreed in talks expected to continue in the autumn, the European Commission and EU diplomats said on Thursday, dashing producers' hopes of an immediate reprieve.
Negotiations and Future Prospects
A framework trade deal between Brussels and Washington on Sunday agreed a 15% tariff for most EU imports into the United States, although some sectors were expected to be exempted.
Historical Context of Tariffs
The U.S. tariff on European wine and spirits is currently 10%. 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 U.S. tomorrow. And therefore that sector will be captured by the 15% ceiling," he said.
Wine-makers said the tariff, even if temporary, would hurt the sector, especially when combined with the stronger euro.
"The 15% 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 U.S. businesses involved throughout the supply chain," said 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%. Investments will be halted and export volumes will decline while waiting for the final agreement," he said.
The U.S. is to publish an executive order on Friday, implementing the framework trade deal that was agreed on Sunday between U.S. President Donald Trump and European Commission President Ursula von der Leyen.
Separately, the EU and the U.S. 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 U.S. 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 U.S. 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 U.S. steel and aluminium tariffs included increased duties on U.S. bourbon and other spirits. These were suspended in 2021.
U.S. 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 U.S. MFN rates, which are very low or at zero.
(Reporting by Jan Strupczewski, Julia Payne and Phil Blenkinsop in Brussels and Emma Rumney in London. Editing by Mark Heinrich and Mark Potter)
