Irish spirits sector 'uniquely exposed' if trade negotiations with US fail

If the US and EU fail to reach a deal by early July, a higher tariff of 20% will kick in as Mr Trump seeks to even out what he sees as a transatlantic trade deficit

While trade deals with both China and the UK have been advanced, the EU is still struggling to make a breakthrough with the US despite several attempts at negotiations. (Photo by Artur Widak/NurPhoto)

Irish spirits remain "uniquely exposed" should no trade resolution between the EU and US be found.

Calling for an immediate removal of all tariffs on EU and US spirits, the Irish Whiskey Association said domestic producers now face a 10% tariff on exports to the US, which is already costing thousands of euro every week. 

"This additional cost, coupled with a weakened dollar, is placing major pressure on the sector, and a swift resolution is required," the association said.

"The immediate cost implications, together with the deepening trade uncertainty, is negatively impacting markets and business for our distillers and drinks manufacturers throughout the country."

While trade deals with both China and the UK have been advanced, the EU is still struggling to make a breakthrough with the US despite several attempts at negotiations. 

In April, US President Donald Trump imposed a 10% baseline tariff on the EU, along with 25% levies on cars and metals. 

If the two sides fail to reach a deal by early July, a higher tariff of 20% will kick in as Mr Trump seeks to even out what he sees as a transatlantic trade deficit, which he blames on the EU. 

"A tariff-free environment has worked and will work best for the spirits sector," the Irish Whiskey Association added. 

"From the introduction of zero-for-zero tariffs in 1997 until 2018 with the steel/aluminium dispute, the value of the spirits sector on both sides of the Atlantic experienced a growth of 450%. 

"The spirits sector in both the USA and the EU remain interconnected, however this period of uncertainty and heightened trade tensions puts investments at risk.

The US is the largest international market for Irish whiskey, with exports to the US totalling around €420m per year. Meanwhile, overall drinks exports from Ireland to the US total €865m annually.

Ireland also remains the primary importer of US casks in the EU, with the casks subject to 25% tariffs should negotiations fail, the association warned. 

"All these developments come against the backdrop of the recent conclusion of the UK-India Free Trade Agreement, which ensures an immediate 50% reduction in tariffs for UK whiskies and spirits to India. This secures a more favourable trading environment for our direct competitors, placing EU products at a further, unique disadvantage."