The European Union (EU) will pause its two sets of countermeasures against U.S. tariffs for six months, following a deal reached with U.S. President Donald Trump, as stated by a spokesperson from the Commission.
The EU-U.S. agreement raises numerous unanswered questions, particularly regarding tariff rates on spirits. Trump’s executive order issued last week imposed tariffs on the majority of EU goods at 15 percent, yet it did not include exemptions for items like cars and car parts.
EU officials have indicated their anticipation of additional executive orders forthcoming in the near future.
The spokesperson indicated that the EU is actively collaborating with the U.S. to finalize a Joint Statement, in accordance with the agreement made on July 27.
“With these objectives in mind, the Commission will take the necessary steps to suspend by 6 months the EU’s countermeasures against the US, which were due to enter into force on 7 August.”
The retaliatory tariffs consist of two components: one in response to U.S. steel and aluminium duties, and the other addressing Trump’s baseline and car tariffs.
Economic risks for producers
According to the European Commission and EU diplomats, European wine and spirits will face a 15 percent U.S. import tariff until a different deal is agreed upon, with talks expected to continue into the autumn of 2025. This is an increase from the current U.S. tariff rate on these products, which stands at 10 percent.
The EU aims to either eliminate these tariffs or at least align the wine tariffs with Most Favoured Nation (MFN) rates, which are based on fixed costs per liter instead of percentage rates.
Olof Gill, Commission spokesperson for trade, has stated that it is not expected that wine and spirits will be among the first sector exemptions announced by the U.S., meaning they will initially be subject to the 15 percent tariff. This tariff increase poses a significant economic risk to European wine and spirits producers as well as U.S. businesses involved throughout the supply chain, potentially causing combined losses approaching 30 percent when currency fluctuations are also considered, as noted by Ignacio Sanchez Recarte, secretary general of the European wine producers group CEEV.
Tariff ceilings established
The framework trade deal announced by European Commission President Ursula von der Leyen and U.S. President Donald Trump sets a ceiling of 15 percent tariffs on most EU imports to the U.S., which is half of what was previously threatened (a 30 percent tariff). This agreement is viewed by EU officials as a step toward greater trade predictability and stability, although industry stakeholders are still awaiting clarity on exemptions for specific sectors, including alcoholic beverages. French Trade Minister Laurent Saint Martin and industry leaders have expressed optimism that spirits might be exempted eventually, though uncertainty remains until the official list of exemptions is released.
The U.S. Distilled Spirits Council (Discus) has welcomed the agreement as beneficial for transatlantic relations, emphasizing the importance of returning to tariff-free trade, which has supported U.S. distillers and related workers for over two decades. Major distillers such as Diageo and Rémy Cointreau, which have a large portion of their sales in the U.S., are expected to be among those most affected if tariffs remain in place, although market analysts like those from Morningstar suggest companies will mitigate impacts through pricing adjustments.
