US announces 25% tariff on Scotch whisky imports

The United States will impose a 25% import tariff on Scotch whisky from October 18th this year, it announced today.

US announces 25% tariff on Scotch whisky imports

The changes mean that the US will impose tariffs on imports from a range of countries in the European Union (EU) worth up to $7.5 billion (£6.1bn).

Last year, Scotch whisky exports to the USA were worth $1.3bn (£1bn).

A report commissioned by GMB Scotland and produced by the Fraser of Allander Institute in April, called ‘Brexit and the Sectors of the Scottish Economy’, revealed Scotland exports £14.9bn worth of goods and services to the EU and around 144,000 jobs are linked to demand from the EU for Scottish exports.

Gary Smith, GMB Scotland secretary, said: “This is a troubling glimpse into the post-Brexit future and everyone with the Scottish economy’s best interests at heart should be concerned about our prospects following this development.

“Scotland and the rest of the UK are sitting ducks after October 31st. The collective strength we have in the EU trading bloc will be gone and there is simply no such thing as a ‘special relationship’ with the United States - Trump will squeeze the UK economy for everything he can get.”

He added: “That’s why we have consistently called on the UK Government to bring forward measures to defend whisky and white spirits manufacturing in the face of Brexit uncertainty and to stand-up to US demands on the removal of the geographical indicator (GI) protection for single malt production.

“Those calls have fallen on deaf ears. The truth is the best Brexit for Scotland would be no Brexit at all and the increasing possibility of a ‘no deal’ scenario will be ruinous for the Scottish economy and damaging for our vital whiskey and white spirits sector.”

Karen Betts, chief executive of the Scottish Whisky Association, said: “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.”

Ms Betts added: “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.”

She continued: “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.”

Stuart McCallum, RSM’s head of food and drink in Scotland, said: “The latest announcement to move towards a 25 per cent tariff between the EU and US on scotch whisky is a significant blow for the sector, which has been somewhat caught in the cross fire of retaliation regarding the Airbus WTO ruling.”

He added: “This is not a complete surprise to us or the sector as there have been rumblings for some time, but the US is a key market for scotch whisky so any imposition of tariffs could have a detrimental impact on key brands across the sector. However, businesses now have a window of opportunity, albeit a short period of time before 18 October, to implement key strategies to mitigate any risk.”

Mr McCallum also said: “It will also be interesting to see what happens post-Brexit. Will the same tariffs apply to Scottish businesses once the UK leaves the EU? Might the US offer the UK a pre-trade deal olive branch on these tariffs for the scotch whisky sector? Regardless, scotch whisky businesses need to continue to proactively consider their options now to mitigate any future risks.”

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