Whisky Focus - President Biden Suspends Trumps 25% Whisky Tariffs

The Scotch whisky industry will be raising a glass to President Joe Biden today as yesterday he agreed to a four-month suspension of the 25% retaliatory tariffs imposed on Scotch whisky by the U.S. administration under former President Donald Trump.

The multi-billion dollar tit-for-tat tariff battle involving the United States, the European Union and Britain relates to a long-running row over state subsidies for planemakers Airbus and Boeing. Britain is party to the dispute as a former member of the EU and maker of key Airbus components. The tariff was imposed by Trump in October 2019 which lead to more than a 30% fall in Scotch Whisky exports to the U.S., in money terms this was a hit of over half a billion pounds to the Scotch Whisky industry.

Scotch Whisky is one of Scotland’s and the UK’s most important industries. It employs 11,000 people in Scotland, and the sector’s supply chain supports 40,000 jobs throughout the UK. Scotch is worth over £5.5bn to the UK economy. Coupled with the impact of COVID-19, the damage that the Trump imposed tariffs have been causing were destined to to lead to job losses both here in the UK and US.

Whisky fans, especially in the US, were destined to see their choices diminish, and favourite products could have become harder to find under the 25% tariffs imposed under Donald Trump. Whisky tariffs are also bad for Scotland’s local communities that rely on free trade with the US to boost the economy. The tariff's have meant that Scotch has lost market share in the US, which cannot be recovered overnight, but the sooner a permanent trade agreement with the US is put in place the better for jobs and whisky drinkers on both sides of the water.

"The United Kingdom and the United States 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," a joint statement said yesterday.

"This 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."

White House Press Secretary Jen Psaki said the decision would give both sides time to work out a solution.

"It was meant to de-escalate the issue and create space for a negotiated settlement to the Airbus and Boeing disputes," she told a White House briefing.

The tariff truce is separate from broader U.S.-UK talks on a post-Brexit trade agreement, but sends a positive signal about those discussions. Psaki declined to say if the U.S.-UK tariff deal foreshadowed a similar truce with Brussels.

Britain and the United States were hoping to reach a trade deal before the expiration of fast-track trade promotion authority granted to the U.S. federal government by Congress in July. To hit that deadline, U.S. trade officials would have to notify Congress about a likely trade deal sometime in April.

‘LOSE-LOSE’ TARIFFS

Ivan Menezes, CEO of Diageo, the maker of Johnnie Walker and Talisker whisky, said a permanent solution would help safeguard thousands of jobs across Scotland and the rest of Britain.

The agreement to lift tariffs is temporary and applies only to UK goods. U.S. tariffs will continue to apply to EU goods, according to a U.S. administration official.

A British official described it as a "real win" which justified a British decision to diverge from EU policy after Brexit and ditch tariffs in hopes of reaching an agreement with the Trump administration before it left office.

At the time, the EU questioned whether Britain had the legal right to keep those tariffs in place after leaving the bloc.

"I am delighted to say that our American allies – under their new President and his hard-working staff at the U.S. Trade Representative - have embraced our move to seek a fair settlement," she said.

U.S. President Joe Biden’s top trade nominee, Katherine Tai, is headed to confirmation by the full Senate next week.

She told the Senate Finance Committee last month that Washington had completed four rounds of negotiations with Britain since announcing the start of talks. She said she would make it a priority to resolve the aircraft subsidy dispute.

Tai, asked if she would prioritise an agreement with Britain, told the committee in written responses to questions released this week that Britain was "an important trading partner and ally".

The Distilled Spirits Council of the United States welcomed Thursday’s decision but said it was disappointed that British tariffs on U.S. whiskey relating to a separate dispute over steel were still being applied.

So if you are in the US, at least for the next four months you will not be hit by this 25% tariff imposed by Donald Trump and going forward I am sure that a fair and sensible agreement will now be reached under President Joe Biden's administration.

If you fancy raising a glass to toast a new deal you will find an outstanding selection of Scotch whisky available from specialist online whisky retailers such as The Whisky Exchange, The Whisky Shop and Master of Malt
 

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