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The United States is gearing up to impose a 25% tariff on French wine, Irish whiskey, and other imported food and beverages. How should international distillers respond?

The Trump Administration has announced its intention to slap punitive tariffs on $7.5 billion worth of European agricultural and industrial goods after winning an important victory in a ruling before the global trade body that handles trade disputes. The new tariffs could go into effect as early as October 18, and constitute the largest arbitration award in World Trade Organization (WTO) history. There are a wide variety of opinions concerning the necessity and potential impacts of the tariffs, but one thing is beyond dispute – they’ve got beverage makers hedging their bets and considering their options.

A silver lining

Investors in the drinks industry who were afraid of a severe impact were momentarily heartened when they learned that the tariffs would spare champagne, cognac, and a few Irish whiskies, as only whisky produced in Northern Ireland will be subject to the tariff. Opinions on the potential impact of the tariffs are as divided as the Emerald Isle itself, however. “There are surprises, nuances, and ambiguities” regarding the variety of spirits covered by the tariffs, wrote Jefferies analyst Edward Mundy in a note. But overall, the list represented “a light touch and we would expect a positive reaction for European spirits companies.”

Trouble ahead

On the other hand, the Distilled Spirits Council, whose members sell in the EU and the US, called the new tariffs “a devastating blow” and President of the National Association of Beverage Importers Robert Tobiassen said that the tariffs would “devastate, perhaps destroy, many small and medium-sized family businesses importing these products into the United States.” The Scotch Whiskey Association, whose members include William Grant & Sons and Diageo (and whose exports to the US are worth more than £1 billion) also chimed in, stating that the tariffs would “undoubtedly damage” the industry.

A solution to every problem

For beverage manufacturers, a clear way out of the impasse is to focus on markets outside the US and EU. India, China, and other Asia-Pacific nations are already anticipated to see an increase in demand for alcoholic beverages, thanks to a continually growing population that has ever more disposable income and a noted tendency toward the adoption of new cultural norms. That tendency can be a double-edged sword, however, and it benefits any importer of “lifestyle” products to be aware of local customs and traditions. That’s where professional translation and localization services become absolutely critical – there’s already a long list of iconic American and European brands who didn’t look before they leapt and wound up as cautionary tales.

Argos has the answers

At Argos Multilingual, our translation and localization professionals can guarantee that your brand message resonates the same way wherever your clients are. Our specialized marketing linguists will handle language-specific nuances with precision – your message will be tailored to meet regional expectations, but it will also stir the same sensibilities globally. To find out more, get in touch with us.

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Frequently Asked Questions

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The consensus seems to be that this latest round of tariffs is the result of a dispute that originally began 15 years ago. In 2004, the US complained to the WTO that the EU was providing subsidies to Airbus to the detriment of Boeing. The tariffs are designed to pressure the Eu into dropping its subsidies for Airbus.

The tariffs are set to go into effect on Friday, October 18, 2019

Unknown. The U.S. Trade Representative’s Office said it would “continually re-evaluate these tariffs based on our discussions with the EU” and expects to enter talks in a bid to resolve the dispute.