Warming of UK-US trade relations hailed with a dram as US suspends tariffs on whisky

The warming of UK-US trade relations is being hailed with a dram after the US agreed to temporarily suspend import tariffs on whisky.

Whisky tariffs will be reduced from 25 per cent to zero for four months from Monday 8 March, but backdated to today.

As well as whisky, the reduction in tariffs applies to other products including cheese, pork and cashmere.

Scottish Chambers of Commerce greeted the news by saying they would “lift a dram while wearing our cashmere jumpers”, while the head of the Scotch Whisky Association said the industry was “breathing a sigh of relief” at the news.

Retaliatory tariffs were introduced on products imported from the EU to the US in 2019 as part of a long-running, 16-year trade dispute over subsidising of aircraft manufacturers.

In 2018 the World Trade Organization (WTO) upheld a ruling that the EU had illegally subsidised European aircraft manufacturer Airbus, while in a counter case in 2019 it also judged that the US had illegally offered US-based Boeing favourable contract terms and tax breaks.

The WTO rulings allowed the US and the EU to impose trade tariffs on each other’s products in compensation, up to a maximum of $7.5bn in the case of the US and $4bn for the EU.

The US tariffs have cost the whisky industry as much as £500m and reduced US exports by 35 per cent since they were first imposed.

In January 2021 the UK suspended tariffs on US products relating to the dispute, and hopes to reach a deal with the US to end the tariffs permanently.

Commenting on the announcement, Scottish secretary Alister Jack said: “This is great news for the Scottish whisky industry – a cornerstone of Scotland’s economy.

“The UK Government has fought incredibly hard on this issue, petitioning the highest levels of the US administration to remove tariffs which were harming our Scottish exporters.

“We are very pleased to have negotiated an agreement to lift tariffs temporarily, and will use this four month window to bring an end to the trade dispute.

“I look forward to our close trading relationship with the US going from strength to strength, opening up new opportunities for Scottish businesses.”

Labour’s shadow Scottish secretary, Ian Murray, said: “This is very welcome news for this vital industry. 

“Thousands of jobs depend on this sector, and we have repeatedly pushed the UK Government to work with the US to lift the tariffs. 

“Ministers must now work with the Biden administration to find a long-term settlement as part of the post-COVID economic recovery programme.” 

Lib Dem MP for Orkney and Shetland Alistair Carmichael also welcomed news.

He said: “It may be a good time for us all to raise a glass to President Biden.

“US tariffs have caused distillers enormous harm since they were imposed by Donald Trump in 2019 and so a respite is welcome.

“It is vital that the government uses the negotiating time that they have to ensure that tariffs are not renewed in the future.

“Whisky is Scotland’s flagship export – despite disruption over the past year, the end of tariffs can only be a good thing as we try to recover.

“With a 23 per cent drop in global exports last year, we need to take every opportunity to help our world-class distilleries in the isles to regain lost ground.”

Dr Liz Cameron, director and chief executive of Scottish Chambers of Commerce, said the warming of trade relations was “an excellent sign” and they “look forward to both governments working together to settle this issue permanently as we narrow in on a trade deal.”