Whisky, beer and gin industries, Walkers Shortbread and Government respond on US tariffs

US tariffs wipe £300m off Scotch whisky exports

By Rod Addy

- Last updated on GMT

Dark days for Scotch whisky as US tariff remains in place
Dark days for Scotch whisky as US tariff remains in place

Related tags Drinks Supply chain Regulation Finance

US tariffs have wiped £300m off Scotch whisky sales, with losses set to grow as it emerged they would be kept in place for what is one of Scotland's staple exports.

Blended whiskies have been exempted from the tariffs. However, Scotch Whisky Association chief executive Karen Betts called the decision to maintain the 25% tariff on single malt Scotch whisky and Scotch whisky liqueurs that has been in place since 18 October 'deeply disappointing'​.

“The tariff is inflicting huge damage on the Scotch Whisky sector, with exports to the US down 30% since the tariff came into effect and the industry grappling with losses now totalling around £300m. These losses relate only to tariffs – the impact of COVID-19 has been serious and has compounded what is now a very serious situation for Scotch whisky, with some brands forced out of the market and jobs in the industry and our supply chain now at risk. 

“The UK government must accelerate negotiations to bring an end to tariffs between the UK and US before preparations for November’s Presidential election bring talks to a halt. It has taken the UK government a full six months after the UK left the EU to start to tackle tariffs directly with the US government, which seems to us inexplicably slow.

"The UK government must now focus its energy on developing a clear strategy for settling the UK share of the Airbus/Boeing and steel and aluminium disputes with the US, rather than looking to the EU to do this for us. Negotiations on a free trade agreement with the US will not solve tariffs and will not be credible while they remain in place."

Call for Government to limit damage

Betts called on the Prime Minister and chancellor to step in to help limit the damage to the whisky industry. Scotch whisky is a crucial part of Scotland’s economy, employing more than 11,000 people and many more than that through the supply chain, in some of the UK’s most productive jobs.

"The support promised to date - £500,000 of export promotion - is woefully inadequate compared to the support offered by the French and US governments to their national industries that have been targeted by tariffs,"​ she said. "At the very least, the government must commit to a duty cut in the Autumn Budget.”

Speaking in response to the US trade representative announcement on tariffs, Scotland secretary Alister Jack said​: "While I welcome blended whisky and gin avoiding tariffs and the decision to remove them from shortbread, I am extremely disappointed the United States continues to punish single malt whisky and cashmere.

I share the Scotch Whisky Association’s very real concerns over what this will mean for our most famous product. It is one of our greatest exporting success stories, worth more than $1.5 billion last year in the US alone.

The UK Government has petitioned the highest levels of the US administration, including the President, on this and we will continue to do so until this is dropped. We have provided significant support for the industry in the last two budgets through the freeze on spirit duty and we will continue to work with them to promote Scotch whisky across the globe."

Tariffs lifted on sweet biscuits

Tariffs also remain in place for certain wines, but have been lifted for UK and EU sweet biscuit exports such as shortbread. The news was welcomed by Walkers Shortbread, which warned in October last year that the US tariffs could threaten jobs within the business​.

Jim Walker, joint managing director of Walkers Shortbread, said: “Walkers Shortbread, a family company based in the Highlands of Scotland was one of the companies most badly hit by the US tariffs, and had requested that these should be removed immediately, especially as the UK is no longer part of the European Union. 

“Walkers is the largest private employer in the area and the tariffs would have had a huge effect on a very small community where there is limited alternative employment. More than 250 jobs in Scotland were at risk because of the tariffs, as well as almost 50 jobs at the US subsidiary of Walkers. 

“Walkers Shortbread is loved by Americans and Walkers has become the largest British exporter of shortbread and sweet biscuits to the American market. Walkers believe we were an innocent bystander in a trade war which had no connection to our industry.  We hope that pressure will continue to be applied on behalf of fine Scottish products such as whisky and cashmere."

International trade secretary Liz Truss said​: "In Washington DC last week I met my opposite number Bob Lighthizer, the US trade representative, to warn against new tariffs being imposed on great British products like gin and blended whisky. I am pleased that the US has not applied these additional tariffs, and welcome the decision to lift tariffs on shortbread.

"However, the announcement does not address tariffs that already exist on goods like single malt Scotch whisky. These tariffs damage industry and livelihoods on both sides of the Atlantic and are in nobody’s interests. I am therefore stepping up talks with the US to remove them as soon as possible."

Brewers welcome beer exemption

The British Beer & Pub Association (BBPA) welcomed the decision not to place US tariffs on beers containing malt imported from the UK. The organisation said the outcome was a welcome relief for British brewers looking to recover their businesses following the COVID-19 lockdown. Currently, more British beer is sent to the US than to all other non-EU nations combined. The US is also the biggest market for British brewers, worth £107m.

Chief executive of the BBPA Emma McClarkin said​: “The decision by the US not to put tariffs on beer is a welcome relief for Britain’s brewers. Due to the fallout they are facing from the COVID-19 lockdown and the impact it has had on domestic sales of beer, exports like those to the US will be crucial for Britain’s brewers as they start to recover their trade. 

“This is a positive signal of intent from the US for a good future trading relationship with UK brewers, enabling further growth for them in the US market. We would like to thank the Department for International Trade for conveying the concerns of our sector to the US trade representative, who clearly listened to them.”

The Wine & Spirits Trade Association (WSTA) responded positively to news that the US had decided not to extend tariffs to UK gin.

'Huge relief' for gin sector

Miles Beale, WSTA chief executive, said: “The news that the US has decided not to escalate tariffs is encouraging. This will come as a huge relief to the growing UK British gin sector which has seen distilleries more than double in number in the last five years.

"Our innovative British distillers, particularly those working in the SME [small and medium-sized enterprises] distilleries that the WSTA represents, can breathe easy and raise a glass to America. This is the first important step in what should prove to be a closer trading relationship, and should provide the necessary space for constructive discussions between the US and UK Governments, and for both administrations to work to remove the remaining tariffs against Liqueurs, Bourbon and Scotch products – and all wine products affected as well."

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