The U.S. and European Union (EU) have struck a deal that will lift some tariffs on aluminum and steel that were enacted by former President Donald Trump.
The deal, which was reached during the Group of 20 summit in Rome last weekend, will remove tariffs on “limited volumes” of aluminum and steel made in EU member countries, Commerce Secretary Gina Raimondo told the Washington Post.
“We think this is a good first step,” Beer Institute president and CEO Jim McGreevy told Brewbound. “We appreciate the administration acknowledging that these tariffs can have negative impacts on relations with allies, and we’ve always said it has significant negative impacts on the end users. But the only real remedy here is to repeal the steel and aluminum tariffs completely.”
The tariffs were first imposed in March 2018 and added 10% on imported aluminum and 25% on imported steel. At the time, McGreevy said the tariffs would amount to a $347 million tax on brewers and could cost the beer industry more than 20,000 jobs.
Canada and Mexico were first excluded, then added, and then tariffs on aluminum and steel from those countries were lifted in May 2019.
“When these tariffs were imposed in 2018, the chamber warned they ‘would directly harm American manufacturers, provoke widespread retaliation from our trading partners, and leave virtually untouched the true problem of Chinese steel and aluminum overcapacity,’” U.S. Chamber of Commerce executive vice president and head of international affairs Myron Brilliant said in a statement. “All of that came to pass. These tariffs hurt 50 American workers for every one they helped. We should learn from this experience.
“Meanwhile, Section 232 tariffs and quotas remain in place on imports from many other countries,” Brilliant continued. “The U.S. should drop the unfounded charge that metal imports from the U.K., Japan, Korea, and other close allies represent a threat to our national security — and drop the tariffs and quotas as well.”
The U.S. imports far more aluminum from Canada than any other country, according to the Department of Commerce’s International Trade Association’s U.S Aluminum Import Monitor. Year-to-date through October, the U.S. has imported about 2.3 million metric tons of aluminum from its neighbor to the north — about 2 million more than the country’s second-largest aluminum trade partner, the United Arab Emirates. Other significant aluminum import partners include Russia, China, Bahrain and India. Germany is the largest aluminum importer of EU members and the U.S.’s 16th largest aluminum importer overall.
Although EU members don’t account for a large amount of aluminum imports, beer industry trade groups are hopeful the deal can help ease the stressed supply chain.
“The Brewers Association is supportive of any action that helps ensure our supply chain partners have access to the materials they need to avoid interruptions and price increases so they can continue to provide small and independent breweries with packaging materials that are increasingly important to our members,” a BA spokesperson told Brewbound.
In addition to lowering costs, the lifting of tariffs could have a secondary benefit of improving price transparency, McGreevy said.
“If the tariffs were repealed, I think we would see a fairly immediate relief from the cost of aluminum, and we know … that the lack of transparency creates an opportunity for unfair and inaccurate benchmarking of the price,” he said. “That’s why we’ve urged the APEX Act and we’ve urged legislators and regulators to investigate the benchmarking practices related to the aluminum price.”
The bipartisan Aluminum Pricing Examination (APEX) Act was reintroduced in the U.S. Senate in August and aims to bring further oversight into aluminum price benchmarking.
As part of the deal reached this weekend, the EU agreed to suspend the retaliatory tariffs it enacted in conjunction with the U.S. steel and aluminum tariffs, which included tariffs on all American whiskeys, such as bourbon, Tennessee whiskey, American rye whiskey and American single malt whiskey, the Distilled Spirits Council of the United States (DISCUS) announced.
“Lifting this tariff burden on American whiskeys not only boosts U.S. distillers and farmers, it also supports the recovery of EU restaurants, bars and distilleries hit hard by the pandemic,” DISCUS president and CEO Chris Swonger said in a statement. “With the removal of these EU tariffs, we are energized and ready to ramp up our American whiskey promotions in the EU to reintroduce America’s native spirits to EU consumers and resume a great American export success story.”
Since the tariffs were put in place, American whiskey exports to the EU have declined from $702 million in 2018 to $440 million in 2020, a drop of 37%, according to DISCUS. American whiskeys have featured prominently in an export promotion program DISCUS runs with the U.S. Department of Agriculture that has led to a 66% increase in overall U.S. spirits exports since its creation 15 years ago. Last year, U.S. spirits producers’ exports totaled $1.38 billion, according to DISCUS.