Irish whiskey a potential target for new US tariffs

There are renewed concerns that Irish whiskey could be in line for new US tariffs, as the Trump administration expands its trade war against European exporters.

On Monday the United States Trade Representative warned that it may introduce new tariffs on European products after the World Trade Organisation ruled that Europe has not complied with an order to end illegal subsidies to aircraft manufacturer, Airbus.

The long-running Airbus case has been at the centre of a deepening trade transatlantic dispute. Earlier this year, the WTO ruled that the United States could impose trade measures worth up to $7.5 billion (€6.8 billion) over what it has said were unfair subsidies given to Airbus by the EU and individual European countries. The US responded with tariffs on a range of European products, including Irish products like Kerrygold and Baileys. Though Scottish whisky was also hit by 25 per cent tariffs, Irish whiskey was exempt.

However, in a statement late on Tuesday, US trade representative Robert Lighthizer said that the US was now considering additional tariffs following this week's follow-up ruling by the WTO compliance court which found that the action "continues to cost American aerospace companies significant lost revenue."

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“In light of today’s report and the lack of progress in efforts to resolve this dispute, the United States is initiating a process to assess increasing the tariff rates and subjecting additional EU products to the tariffs,” he said.

“The EU’s frivolous case proves that strong action is needed to convince the EU that its interests lie in eliminating these market-distorting subsidies now and in the future, so that our industries can compete on a level playing field.”

In a letter to members, the Irish Whiskey Association warned that the threat to Irish whiskey products has escalated, noting the fact that the US only imposed tariffs on a small fraction of the $7.5 billion worth of tariffs they were permitted to impose in October.

Warning of the "serious ongoing threat that tariffs could yet be applied to more Irish whiskeys, particularly in light of the Ibec assessment that the US had only imposed tariffs worth a small fraction of the overall total they were allowed to impose," William Lavelle, head of Drinks Ireland wrote to members: "This threat has now escalated further."

While the US exempted Irish whiskey from the list of products subject to a 25 per cent tariff, it reserves the right to add or remove products from the list. Britain, France, Italy and other countries are expected to lobby the United States strongly at this week's Nato summit in London to exempt their own products from any punitive measures.

The renewal of the Airbus tariff threat comes as the US threatened to impose 100 per cent tariffs on French goods including champagne and luxury goods in response to the country's introduction of a digital tax, which it says unfairly targets American tech companies. The tax, which targets companies like Google, Apple, Facebook and Amazon, was introduced by France which had been pushing for an EU-wide system that would ensure tech companies would pay their fair share of tax in countries where they do business.

Speaking alongside French president Emanuel Macron in London on Tuesday, Mr Trump warned that the US could impose "substantial" taxes on French goods, though he said that America would "rather not" do that. France has warned it will retaliate with a "strong riposte" if the US imposes the new tariffs. "It's in no one's interest. It's not in the interest of growth, or of political stability," French finance minister Bruno Le Maire said of the proposed new US tariffs.