European wines and spirits are set to face a 15% tariff with the U.S. and EU unable to reach a deal to exempt these products under their trade agreement. While the current draft of the trade deal is non-binding, it seems unlikely that wines and spirits will receive a last-minute carve out, according to reporting in the New York Times.

A 15% tariff on European imports would be another significant headwind for the industry during an already challenging year. According to the Distilled Spirits Council of the U.S. (DISCUS), the levy could cost up to $1 billion in retail activity and cause the industry to shed 12,000 jobs. “Without a permanent return to zero-for-zero tariffs on spirits, American distillers do not have the certainty to plan for future export and job growth without the fear of retaliatory tariffs returning,” said DISCUS president and CEO Chris Swonger.

Across the pond, trade group Unione Italiana Vini (UVI) estimates that the tariffs will cost Italian producers between €317 million and €460 million ($370m-$535m) and harm the U.S. industry more, jeopardizing roughly $1.7 billion in revenue. “This is a major setback for the industry,” said Lamberto Frescobaldi, UVI’s president. “The second half of the year will be very difficult. More than ever, it is crucial to form an alliance with our U.S. partners—distributors, importers, and restaurateurs—who share our opposition to tariffs in defense of both Italian and American businesses.”—Shane English