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EU-US Talks Avert Tariff Hike On American Whiskey, Motorcycles

Published on May 18 2021 10:29 AM in Supply Chain tagged: US / Whiskey / EU / Tariff

EU-US Talks Avert Tariff Hike On American Whiskey, Motorcycles

The European Commission, which oversees EU trade policy, said it would suspend for up to six months a threatened 1 June doubling of retaliatory tariffs on Harley-Davidson motorcycles, American whiskey and motorboats, and refrain from slapping tariffs on more US products from lipstick to sports shoes.

The United States and the European Union agreed on Monday not to escalate their dispute over US steel and aluminium tariffs, averting steep EU tariff hikes while the two sides launch formal talks on addressing excess global capacity largely centred in China.

But the United States will maintain its tariffs of 25% on steel and 10% on aluminium despite the announcement. Those duties also apply to imports from China, India, Norway, Russia, Switzerland, Turkey, Japan and South Korea among others metals-exporting countries.

In a joint statement, Brussels and Washington said that as allies and market-based economies, they could promote high standards, address shared concerns "and hold countries like China that support trade-distorting policies to account."

Discussions

The discussions would seek solutions before the end of the year to the issue of global steel and aluminium overcapacity, although a Commission official said a resolution of the tariff dispute should come much sooner.

A month ahead of a visit to Brussels by US President Joe Biden, one EU diplomat said it would have been "terrible optics" if the bloc had raised tariffs on Harley Davidson bikes and products of other US firms.

Bernd Lange, head of the trade committee of the European Parliament, said the United States needed to come to a EU-US summit with a 'tangible' commitment to reciprocate the EU gesture. Otherwise, tariff hikes would be justified.

Former President Donald Trump's administration cited US national security grounds as the basis for its metals tariffs - measures that steelmakers such as Thyssenkrupp and Voestalpine have said hurt them.

The EU denies that its exports pose any security threat and responded by placing its own tariffs on €2.8 billion ($3.4 billion) of US products, including motorbikes, whiskey and orange juice. They will also remain in place.

A Step In The Right Direction

The suspension of further tariffs was greeted as a step in the right direction, however, by European Aluminium, the US Distilled Spirits Council and Harley-Davidson Inc, whose shares rose more than 8% to a three-year high.

Brown-Forman said in a statement that it applauds the Biden Administration and its EU counterparts for this 'positive step' forward.

'However, American whiskey still remains subject to 25% retaliatory tariffs in the EU and UK. We remain hopeful that the negotiators will build on the progress that’s been made and ultimately secure a removal of tariffs on American whiskey,' the Jack Daniel's parent added.

The American Iron and Steel Institute said it hoped US-EU discussions could work toward substantive solutions, while maintaining trade measures. It also said China was not the sole cause of overcapacity and that import surges had come from every region.

The Commission has said the US tariffs affect €6.4 billion of EU metal exports and that it would 'rebalance' the remaining €3.6 billion after three years, or after a favourable ruling by the World Trade Organisation, where it is challenging the US tariffs.

News by Reuters, additional reporting by ESM. For more Supply Chain news, click here. Click subscribe to sign up to ESM: European Supermarket Magazine.

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