Whisky Focus - Scotch Whisky To Face 25% US Tariff

Scotch Whisky To Face 25% US Tariff

3rd October 2019
US set to target Scotch Whisky with 25% tariff.

Scotch Whisky To Face 25% US Tariff

Scotch whisky exports to the United States which last year were worth £1bn ($1.3bn), with Scotch single malt whiskies accounting for 33% of that figure, are set to face a tariff of 25% from 18 October, the new duty is part of a raft of measures being imposed by the US in retaliation against EU subsidies given to aircraft maker Airbus.

Other goods being targeted include cashmere sweaters, dairy products, pork, books and some machinery, tariffs are certain to impact sales and could ultimately impact jobs here in Scotland.

The US was given the go-ahead to impose tariffs on £6.1bn ($7.5bn) of goods it imports from the EU following a World Trade Organisation (WTO) ruling on Wednesday, President Trump described the ruling as a $7.5bn win for the US.

It is the latest chapter in a 15-year battle between the US and the EU over illegal subsidies for planemakers Airbus and rival Boeing.

The EU has threatened to retaliate similarly against US goods but with the UK on the brink of exiting Europe Scotch whisky producers can only hope that a individual deal with the US after Brexit will see this 25% tariff scrapped but that may be unlikely as it is thought that President Trump has long seen Scotch whisky as a potential target for tariffs.

Karen Betts, Chief Executive of the Scotch Whisky Association commented on the 25% tariff, saying:

"We are very disappointed that the United States Government has announced a tariff of 25% on imports of Single Malt Scotch Whisky and Liqueurs from the UK. This is a blow to the Scotch Whisky industry. Despite the fact that this dispute is about aircraft subsidies, our sector has been hit hard, with Single Malt Scotch Whisky representing over half of the total value of UK products on the US Government tariff list (amounting to over $460 million).

"The tariff will undoubtedly damage the Scotch Whisky sector. The US is our largest and most valuable single market, and over £1 billion of Scotch Whisky was exported there last year. The tariff will put our competitiveness and Scotch Whisky’s market share at risk. We are also concerned that it will disproportionately impact smaller producers. We expect to see a negative impact on investment and job creation in Scotland, and longer term impacts on productivity and growth across the industry and our supply chain. We believe the tariff will also have a cumulative impact on consumer choice.

"The Scotch Whisky industry has consistently argued against the imposition of tariffs in our sector. For the last 25 years, trade in spirits between Europe and the US has been tariff-free. In that time, exports of Scotch Whisky to the US and of American Whiskey to the UK and Europe have grown significantly, benefitting communities on both sides of the Atlantic, boosting investment, employment and prosperity for all. For this reason, the Scotch Whisky Association - alongside American and European spirits producers - has urged the EU and the US not to draw spirits into trade disputes that have nothing to do with our sector.

"We believe it is imperative that the EU and US now take urgent action to de-escalate the trade disputes that have given rise to these tariffs, to ensure that these latest tariffs are not implemented on 18 October, and to ensure that other tariffs – including on the export of American Whiskey to the EU – are removed quickly. In particular, the UK government must now work with both sides to urge a negotiated settlement and to ensure that these damaging tariffs do not take effect.

The World Trade Organisation's dispute settlement body must formally adopt the ruling but is not expected to overturn the decision.

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