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U.S. Retaliatory Tariffs Could Cost up to 78,600 Jobs in U.S. Beverage Alcohol & Hospitality Sectors

Alcohol Trade Groups Urge USTR Not to Impose Retaliatory Tariffs on EU Spirits & Wines
by Joint Statement
August 05, 2019

Washington, D.C.—Up to 78,600 jobs in the U.S. beverage alcohol and hospitality sectors could be lost if distilled spirits, wine and non-alcoholic beer are included on the final U.S. list of European Union (EU) products targeted for retaliatory tariffs, according to an analysis in a submission to the United States Trade Representative (USTR) by U.S. alcohol trade groups.

The proposed retaliatory tariff list is part of a long-standing dispute at the World Trade Organization (WTO) regarding civil aircraft subsidies and is unrelated to the beverage alcohol industry.

The joint comment was submitted by U.S. alcohol trade groups representing several beverage alcohol suppliers, wholesalers, importers and retailers. In the submission, the groups reaffirmed their strong objection to tariffs and the inclusion of EU spirits and wines on the preliminary retaliation list emphasizing that it “will lead to negative unintended consequences for U.S. consumers, will cause a further decline in U.S. beverage alcohol exports and will result in a significant loss of U.S. jobs.”

They explained that imposing retaliatory tariffs on EU wine and spirits products harms both the U.S. and EU alcohol sectors since many companies have created complementary product portfolios comprised of both domestic and imported spirits, wine and beer brands to meet consumer demand.

According to the analysis, approximately 11,200 to 78,600 U.S. jobs could be eliminated if the U.S. moves forward in slapping tariffs on spirits and wine products imported from the EU. This estimate is a significant increase from the loss of jobs estimated in the group’s May 28th submission due to USTR’s decision to add Scotch Whisky and Irish Whiskey to its April 8 preliminary list of EU products, which included wine, liqueurs and cordials, and Cognac.

“If beverage alcohol products remain on the final U.S. list, the EU would certainly respond by keeping U.S. beverage alcohol products on its list, thus inflicting more damage on U.S. companies that export to this critically important market and hampering the export progress that has benefited our sectors and created good paying jobs across the U.S,” the groups stated. The EU has threatened to impose tariffs on imports of U.S. wine, vodka, and rum.

The groups underscored that the impacts of retaliatory tariffs are accelerating and are being felt across the entire U.S. supply chain, from farmers to suppliers to retailers.

Since the EU’s imposition of a 25 percent tariff on American Whiskey last summer, American Whiskey exports have declined 19 percent. Additionally, China is imposing a 54 percent retaliatory tariff on U.S. wine imports, which is contributing to a 57 percent decline in trade with China since the beginning of 2019.

Several small U.S. distillers and vintners have had their export orders cancelled due to the tariffs and as a result have put a hold on hiring and have cut back on grain purchases.

The joint comment was submitted by the Distilled Spirits Council of the United States, American Craft Spirits Association, American Distilled Spirits Association, Kentucky Distillers’ Association, Wine Institute, WineAmerica, Wine & Spirits Wholesalers of America, Wine and Spirits Shippers Association, American Beverage Licensees and the National Association of Beverage Importers.

The full text of the public comment can be downloaded here.

DISCUS and NABI Presidents Testify at USTR Hearing on Retaliatory Tariffs

In addition to the joint submission to USTR, the presidents of the Distilled Spirits Council of the United States and National Association of Beverage Importers are testifying today at a related hearing at USTR.

Distilled Spirits Council of the United States President and CEO Chris Swonger’s testimony can be downloaded here.

National Association of Beverage Importers President Robert M. Tobiassen’s testimony can be downloaded here.

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