European wine and spirits will face a 15% U.S. import tariff until a different deal is agreed in talks expected to continue in the autumn, the European Commission and EU diplomats said on Thursday, dashing producers’ hopes of an immediate reprieve.

A framework trade deal between Brussels and Washington on Sunday agreed a 15% tariff for most EU imports into the United States, although some sectors were expected to be exempted.

The U.S. tariff on European wine and spirits is currently 10%. Brussels is keen to reduce that to zero or, for wine at least, to the Most Favoured Nation (MFN) rates that are set on a fixed cost per litre basis, rather than in percentage terms.

“The Commission remains determined to achieve and secure the maximum number of carve-outs, including … wine and spirits,” Commission spokesperson for trade Olof Gill said.

“It is not our expectation that wine and spirits will be included as an exemption in the first group announced by the U.S. tomorrow. And therefore that sector will be captured by the 15% ceiling,” he said.

Winemakers said the tariff, even if temporary, would hurt the sector, especially when combined with the stronger euro.

“The 15% duty on EU wines, even if applied for some months until the negotiations are closed, would cause significant economic losses not only for EU wine producers but also for U.S. businesses involved throughout the supply chain,” said Ignacio Sanchez Recarte, secretary general of European wine producers group CEEV.

“When combined with the currency shift in the dollar/euro exchange rate, the overall financial burden on the sector could reach 30%. Investments will be halted and export volumes will decline while waiting for the final agreement,” he said.

U.S. Distilled Spirits Council President and CEO Chris Swonger also urged a quick deal to bring tariffs down to zero.

“It is extremely disappointing and utterly exasperating that the U.S. 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,” Swonger said.

“It is critical for our great American distilleries, farmers and hospitality workers across the country that President Trump secure a permanent return to zero-for-zero tariffs on spirits with the European Union,” he said in a statement.

The U.S. is to publish an executive order on Friday, implementing the framework trade deal that was agreed on Sunday between U.S. President Donald Trump and European Commission President Ursula von der Leyen.

Separately, the EU and the U.S. are to publish a joint statement spelling out the details of the framework deal.

A senior diplomat said that talks on wine and spirits tariffs would continue after the joint statement. “(This will take place) probably in the autumn,” the diplomat said.

Until recently, spirits had benefited from zero tariffs between the U.S. and EU following an agreement in 1997 that also included other countries such as Canada and Japan.

That lasted until 2018, when the EU response to U.S. steel and aluminum tariffs included increased duties on U.S. bourbon and other spirits. These were suspended in 2021.

U.S. MFN rates for wine are 19.8 cents per litre for sparkling and 6.3 cents per litre for most other wines, which equates to very low rates in most cases.

Source:  Reuters