What the US-EU trade deal means for drinks firms
EU wine and spirits exports to the US “must be protected, not undermined”, say trade officials waiting to learn whether alcoholic beverages will be exempted from the 15% tariff set by President Trump on Sunday.
On Sunday the US struck a framework trade deal with the European Union imposing a 15% import tariff on most EU goods.
The deal, announced by US President Donald Trump and European Commission President Ursula von der Leyen, secures the rate of tariffs at half what President Trump had threatened in the run up to the deadline on 1 August.
On July 12, Trump threatened to apply a 30% tariff on imports from the EU after weeks of negotiations failed to reach a comprehensive trade deal.
Cutting the final figure to 15% in the official deal announced over the weekend is hoped to relieve some concern among business owners by providing stability. Von der Leyen told reporters it was “the best we could get”.
She said: “We have a trade deal between the two largest economies in the world, and it’s a big deal. It’s a huge deal. It will bring stability. It will bring predictability.”
However, the baseline 15% tariff will still be seen by many in Europe as too high, compared with Europe’s initial hopes to secure a zero-for-zero tariff deal.
The high-level agreement is set to include tariff exemptions for some products, the rates for which are still to be decided.
Alcoholic beverages are thought to be among the exempted products, according to trade and industry officials.
Chris Swonger, chief executive of the Distilled Spirits Council of the United States (Discus) called the announcement “great news for US and EU relations”.
“We are optimistic that in the days ahead this positive meeting and agreement will lead to a return to zero-for-zero tariffs for US and EU spirits products, which will benefit not only our nation’s distillers, but also the American workers and farmers who support them from grain to glass,” he said.
“For more than 20 years, large and small distilleries across the US have flourished under a tariff-free relationship with the EU, our largest export market. It’s time to get back to toasts not tariffs.”
On Monday, French Trade Minister Laurent Saint Martin also said he expected the spirits sector to be exempted from US tariffs.
But with the exempted list yet to be announced, uncertainty remains.
Verushka Shetty, equity analyst at US financial services company Morningstar, said: “Distillers often get caught in the crossfire of trade wars, and leading firms have a proven record of successfully mitigating tariff hikes.”
Diageo and Rémy Cointreau are the distillers with the highest proportion of US sales. According to Shetty, they will therefore likely suffer the highest impact. However, uncertainty remains over whether tariffs will be applied to French spirits and wine.
“Near-term, we expect a negative impact on margins across our spirits coverage, however we expect the impact to be limited with pricing actions,” Shetty said, suggesting that firms will have to pass on price increases to consumers in order to shield themselves from cost increases.
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Alcohol is among the EU’s top exports to the United States, worth approximately €9 billion (US$10.5bn) in 2024, according to Eurostat data.
The US is responsible for 34% of Irish whiskey exports, making it by far the biggest market for distillers in Ireland.
When it comes to Champagne, the US accounts for approximately 18% of exports.
Two in five (43%) bottles of Cognac find their way to US shores, far higher than the French spirits region’s second biggest market, China (16%).
The UK and US both import 14% of international Spanish wine shipments, taking joint top spot.
And a quarter (24%) of Italian wine exports are shipped to the US.
In the weeks before the 15% tariff rate was set, wine producers in Italy’s Chianti region said they would be turning their attention to Asia, Africa and South America to curb the impact of US tariffs.
Giovanni Busi, president of the Consorzio Vino Chianti, which represents 3,000 vineyards in the region, said Chianti producers would continue to ship to the US, but he recognised the need for business to diversify their export markets to cushion the inevitable blow that US tariffs will bring.
Trade bodies and wine and spirits businesses will be watching closely as trade agreement negotiations continue to unfold.
On 11 July the Comité Européen des Entreprises Vins (CEEV), which represents the EU’s wine industry, released a statement raising concerns over whether wine will be left out of the list of sensitive goods included in the deal package.
Marzia Varvaglione, president of CEEV, called on the European Commission “to ensure that wine and aromatized wine products remain an integral part of the negotiation package with the US administration”.
She warned against “the definitive establishment of an ad valorem tariff” on US wine imports from the EU, saying it would “amplify” headwinds already harming the trade.
The US remains the largest export destination for EU wines, representing 27% of EU wine exports in value and 21% in volume.
“European wine exports do not harm the US economy — on the contrary, they support it,” said Ignacio Sánchez Recarte, secretary general of the CEEV.
“Because of the three-tier system for alcohol distribution in the US – separation of producer, distributor and retailer, it is estimated that for every $1.00 generated by European wine exports to the US, American distribution and hospitality sectors earn $4.50. The € 4,88 billion EU wine exported to the US in 2024 would have generated roughly $22 billion revenue for US companies across the tree-tier.” he added.
The CEEV described wine as a “win-win relationship” between the US and EU, and one which “must be protected, not undermined”.
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