The US has agreed to temporarily remove tariffs on UK goods, including single malt Scotch, but trade groups have called for further negotiations to include the elimination of tariffs on American whiskey.

The tariffs on Scotch whisky were introduced due to an ongoing dispute between the US and the EU regarding plane manufacturers Airbus and Boeing. Since single malts were subjected to the tariffs, exports of Scotch to the US have plummeted by 35%.

The two nations have agreed a new ‘joint approach’ to the trade conflict, with the US dropping tariffs for four months in a bid to reach a ‘negotiated solution’ to the 16-year spat. The measure will come into force on Monday 8 March, backdated to today (4 March).

UK prime minister Boris Johnson said: “From Scotch whisky distillers to Stilton makers, businesses across the UK will benefit from the US decision today to suspend tariffs in this dispute.

“It shows what the UK can do as an independent trading nation, striking deals that back our businesses and support free and fair trade.”

The move follows the UK government’s announcement in December 2020 that it would suspend the tariffs that the European Union imposed on US$4 billion of US goods as part of the long-running Airbus and Boeing dispute, signalling good news for rum, vodka, brandy and vermouth from the States. In January this year, the UK and US failed to reach a ‘mini-deal’ that could have removed tariffs on single malts.

The UK government said its initial removal of tariffs was a ‘show of good faith’.

UK international trade secretary Liz Truss said: “The benefits will be felt across our nation, especially in Scotland, where Scotch whisky distillers will be able to sell at lower prices in the United States, their most valuable market.

“The easier it is for Americans to buy a bottle of Macallan, Talisker or Glenfiddich, the more money those producers will have to invest in their businesses, their staff and futures.

“Today’s agreement shows that both the UK and the US are determined to work together to build back better and take our trading relationship to new heights.”

The UK and US are currently working towards a trade deal, which could remove almost £500 million (US$700m) in tariffs on UK exports to the States, according to the UK government.

Industry response

Trade group the Scotch Whisky Association (SWA) welcomed the announcement, which will allow businesses to focus on their recovery from the pandemic.

The SWA’s chief executive Karen Betts said: “The tariff on single malt Scotch whisky exports to the US has been doing real damage to Scotch whisky in the sixteen months it has been in place, with exports to the US falling by 35%, costing companies over half a billion pounds.

“So today, 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.”

Betts added that the two nations must “work hard on finding a negotiated settlement to this long-running aerospace dispute” and resolve the aluminium and steel tariffs that currently impacts American whiskey exports to the UK.

The Distilled Spirits Council of the US also praised the temporary removal of tariffs: “The US and UK governments’ commitment to de-escalate trade tensions represents a fresh start to trade relations under the Biden administration and is a hopeful sign that a resolution to the tariffs on US and UK spirits may be in reach.”

However, the trade group said it was disappointed that the UK’s tariff on American whiskey remained in place.

The statement continued: “American whiskey exports to the UK, our fourth largest market, have declined by 53%, from US$150m to US$71m since the imposition of tariffs (2018-2020).

“We urge the US and UK to build on this positive momentum by negotiating an agreement to simultaneously eliminate retaliatory tariffs on all distilled spirits, which will benefit hospitality businesses on both sides of the Atlantic that are struggling to recover and rebuild from the global pandemic.”

Diageo, the world’s largest Scotch whisky distiller, also welcomed the move, and said it hoped for a permanent tariff removal.

Diageo CEO Ivan Menezes said: “Today is a very good day for Scotch and Scotland. We recognise the government’s tireless efforts, using the UK’s newly independent trade policy, to deliver the suspension and hopefully in time, a permanent end to these punitive tariffs.

“We pay particular thanks to the prime minister, Liz Truss, Alister Jack and their teams for speedily negotiating this truce with the new US administration. Final resolution of the aerospace dispute, combined with the announcement of a continued freeze on spirits duty in yesterday’s budget, will safeguard thousands of jobs across Scotland and the UK.”
Via News – The Spirits Business
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