Scotch whisky makers 'delighted' as US suspends tariffs

Saleha Riaz
·3 min read
Cheers: The tariff was part of a row between the two countries over government subsidies given to Airbus and Boeing. Photo: Getty Images
Cheers: The tariff was part of a row between the two countries over government subsidies given to Airbus and Boeing. Photo: Getty Images

Single malt scotch whisky exporters in the UK breathed a sigh of relief on the announcement that the 25% tariff imposed on them by the US in October 2019 was being lifted, albeit temporarily.

The tariff was part of a row between the two countries over government subsidies given to Airbus (AIR.PA) and Boeing (BA) and included other products such as fabric cashmere. But the impact on scotch whisky appeared to be most pronounced.

The Scotch Whisky Association (SWA) had earlier said shipments of single malt to the United States had fallen by more than a third since the Trump administration imposed the tariff, and that scotch whisky had endured £500m ($699m) of export losses because of a trade dispute not of its making.

In light of the new announcement, the association's chief Karen Betts said: "Our industry is delighted... everyone in our industry – from small companies to large – is breathing a sigh of relief. Suspending these tariffs – stemming from a transatlantic trade dispute that had nothing to do with us – and a return to tariff-free trade with the US means livelihoods and communities across Scotland will be protected.

"It means that companies can now really focus on recovery – on building back the American market as well as on building back global exports hit by the coronavirus pandemic."

READ MORE: Trump-era whisky tariffs hammer Scotch exports by £500m

In a joint statement, the US and UK said they are “undertaking a four-month tariff suspension to ease the burden on industry and take a bold, joint step towards resolving the longest running disputes at the World Trade Organization.”

This includes tariffs on cashmere, machinery and other products that had been impacted.

The move “will allow time to focus on negotiating a balanced settlement to the disputes, and begin seriously addressing the challenges posed by new entrants to the civil aviation market from non-market economies, such as China,” the statement said.

The UK had ceased retaliatory tariffs from 1 January.

UK International Trade Secretary Liz Truss announced last summer that she was making a renewed effort to get the tariffs on whisky lifted as the US presidential election loomed, but hopes of a trade agreement faltered when Joe Biden won and time for a deal ran out ahead of the transition.

The SWA had also called for further support to the industry, given the level of losses, including a sustained push to reduce the basic customs duty in India, which is currently 150%.

Earlier this month the body said that in 2020, global exports of scotch whisky fell by more than £1.1bn.

The US is the most valuable market for scotch whisky, valued at over £1bn in 2019 when it accounted for a fifth of global exports. In 2020, exports to the US fell by 32% to £729m, a loss of £340m compared with 2019, and accounting for around one-third of total global export losses, SWA said.

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