Irish whiskey producers urge action as 15% tariff set to hit exports to US

Spirits producers seeking zero-for-zero arrangement with the US

Michael Scully of Clonakilty Distillery. Whiskey producers have warned a 15% tariff on Irish produce entering the US will have a serious effect on an industry which is already under pressure. 

Whiskey producers have warned a 15% tariff on Irish produce entering the US will have a serious effect on an industry which is already under pressure. 

European wine and spirits are set to face a 15% US import tariff until a further deal is agreed in talks expected to continue into autumn. Industry leaders have called on the Government to press European negotiators to take urgent action towards zero for zero tariffs.

Many in the sector had hoped spirits would be exempted from tariffs under the deal struck between the EU and the Trump administration. The US tariff on European spirits was 10% up until now and Brussels was seeking to reduce that to zero.

Michael Scully, the founder of Clonakilty Distillery in West Cork, said the news of the increased tariffs is "very unwelcome" to the industry. "The 10% tariff was one thing, but 15% is gone too far," Mr Scully said. 

"Ultimately, any tariff will have to be passed on to the US consumer. It's a market that's soft at the moment so passing on costs will hit volume sales. That will be the case for all south of Ireland whiskeys."

Clonakilty Distillery employs 32 people directly and around 50 downstream. "I would hope that jobs won't be affected, but 20% of our product goes to the US. So we will have to find other markets to make up for this."

Clonakilty Distillery distributes to over a dozen countries including the UK, Canada, South Africa, Japan, France, South Korea, The Netherlands, Belgium, Germany, Poland, Switzerland, Italy and Austria.

"We were holding out for zero for zero tariffs so a 15% deal would be very disappointing. Europe must do everything to get back to zero for zero. In its absence the Government should step in to support the sector to make up for this loss. The industry has huge potential." 

The whiskey and spirits sector has endured serious setbacks in recent months. Last week, the Killarney Brewery and Distillery, which produced a premium whiskey, entered liquidation. Meanwhile in June, a receiver was appointed for the maker of Fercullen whiskey, Powerscourt Distillery in Wicklow.

The US is set to publish an executive order on Friday spelling out the details of their framework deal, and the EU and US are expected to issue a joint statement. A senior diplomat told Reuters that talks on wine and spirits tariffs would continue after the joint statement, and likely continue into autumn. 

Eoin Ó Catháin, the director of the Irish Whiskey Association said a return to the zero-for-zero remains a priority for the spirits sector in both the USA and the EU.

"The Irish Whiskey Association notes media reports today which indicate that our products will face a 15% tariff when exporting to the USA from August 1st. We understand that negotiations will continue past this deadline, and a return to the zero-for-zero remains a priority for the spirits sector in both the USA and the EU.

"The application of this tariff will increase costs for both exporters and consumers, and will have knock-on effects on the hospitality and tourism sectors in the USA. The zero-for-zero trade arrangement, which removed tariffs on our products in 1997, worked well for over three decades. It has never been more important to return to this as soon as possible."

Opposition to the tariff is also strong Stateside. The US Distilled Spirits Council president and CEO Chris Swonger called for a quick deal to bring tariffs down to zero. "It is utterly exasperating that the US and EU have not yet come to an agreement on spirits, which is an easy win for the United States that will help secure our economic vitality during this challenging time for the hospitality industry," Mr Swonger said.