Kaine, Warner and Colleagues Urge Biden Administration to Protect Virginia Jobs, Remove Retaliatory Tariffs on Whiskey and Spirits

WASHINGTON, D.C. – Today, U.S. Senators Tim Kaine and Mark R. Warner joined Senators Catherine Cortez Masto (D-NV), Todd Young (R-IN), Rand Paul (R-KY), and a bipartisan group of colleagues in a letter urging the Biden Administration to act quickly to protect the millions of U.S. jobs that rely on American whiskey and spirits producers by negotiating with the European Union (EU) to remove retaliatory tariffs that hurt these businesses in Virginia and across the country. In Virginia, the spirits industry supports 16,600 jobs and generates billions in economic activity, including over $1.7 billion in 2019. Without urgent action from the Biden Administration, the EU will implement a 50% tariff on American whiskey imports on January 1, 2024, and American and Virginia wine and other distilled spirits imports could see sharp tariff increases by 2026, hurting their businesses and jeopardizing jobs.

“We write today to request an expedited agreement with the European Union (EU) to secure the permanent removal of retaliatory tariffs on spirits and wines,” the senators wrote. “We are deeply concerned that a lack of a permanent solution risks the re-imposition of tariffs.”

“Spirits have had a significant cultural impact in our country, and currently have a profound impact on the U.S. economy. In 2022 alone, U.S. distilled spirit exports reached $2.06 billion. But the impact of the retaliatory tariffs was devastating… Our belief is that the imposition of additional tariffs on this industry is detrimental,” the senators concluded. “There are mutual benefits in finding a path forward, and our belief is that spirits and wines are a point where there can be consensus to limit the damage for all parties.”

Retaliatory tariffs by the EU have cost domestic sprits distillers and winemakers billions of dollars since 2018, and the U.S. needs a permanent solution to safeguard over 1.7 million production, distribution, and hospitality jobs that rely on the industry. The EU originally set the whiskey tariff at 25%, and following Kaine’s push, the Biden Administration negotiated an agreement to suspend the tariff until 2024. Unless an agreement is reached before January 1, the tariff will be reimposed and doubled to 50%. The senators’ bipartisan letter urges U.S. Trade Representative Katherine Tai to negotiate a deal to permanently remove retaliatory tariffs on all American-made sprits and wines.

The letter was also signed by Senators Mitch McConnell (R-KY), Mike Crapo (R-ID), Marsha Blackburn (R-TN), Joe Manchin (D-WV), Roger Marshall (R-KS), Jacky Rosen (D-NV), Bill Hagerty (R-TN), Maria Cantwell (D-WA), Katie Britt (R-AL), Mike Braun (R-IN), Gary Peters (D-MI), and John Cornyn (R-TX).

Full text of the letter is available here and below:

Dear Ambassador Tai,

We write today to request an expedited agreement with the European Union (EU) to secure the permanent removal of retaliatory tariffs on spirits and wines. While we applaud the Administration’s efforts to suspend retaliatory tariffs for five-years on spirits and wines in the WTO Large Civil Aircraft Dispute and the two-year pause on American Whiskeys in the steel and aluminum dispute, we are deeply concerned that a lack of a permanent fix risks the re-imposition of tariffs. As of now, a 50 percent tariff is set to hit American Whiskeys on January 1, 2024.

Spirits have had a significant cultural impact in our country, and currently have a profound impact on the U.S. economy. In 2022 alone, U.S. distilled spirit exports reached $2.06 billion. But the impact of the retaliatory tariffs was devastating. For the American Whiskey industry, exports decreased from $702 million to $440 million, a loss of 20 percent between 2018 and 2021. In 2022, American spirits exports rebounded over 2017 pre-tariff levels – the last full year before retaliatory tariffs – due in large part to the suspension of retaliatory tariffs. For many in the hospitality industry and others such as retailers, grocers, importers and distributors, many of which are small, locally-owned businesses, the impact was severe, compounded by the onset of the Covid-19 pandemic.

While we understand that you continue to negotiate towards a deal to settle the dispute related to steel, we believe that the targeting of spirits is extraneous. Likewise, a permanent fix is needed as the two-year pause on American Whiskey tariffs is set to snapback soon.

Understanding that tariffs are a ‘tool in the toolbox’ in negotiating a deal, the imposition of additional tariffs on this industry would be detrimental. There are mutual benefits in finding a path forward, and our belief is that spirits and wines are a point where there can be consensus to limit the damage for all parties.

We look forward to your support in finding a permanent fix for retaliatory tariffs on spirits and wines.

Sincerely,

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