Scotch Whisky warns of damage from Trump tariffs

The Scotch Whisky Association (SWA) said on Thursday the Trump administration’s decision to put 25% tariffs on single malts will “undoubtedly damage” the Scotch Whisky sector.

SWA chief executive Karen Betts said the US is Scotch Whisky’s largest and most valuable single market with over £1 billion of Scotch Whisky exported there last year. 

“The tariff will put our competitiveness and Scotch Whisky’s market share at risk,” said Betts.

The Trump administration on Wednesday announced 25% tariffs on single-malt Scotch whisky, French wine and Italian cheese in retaliation for European Union subsidies on large aircraft.

By value, 33% of Scotch Whisky exports to the US in 2018 were single malts — a value of £344 million, or $463 million.

The US market accounted for 22% of global value, and 10.7% of global volumes of Scotch Whisky exports in 2018.

About 137 million bottles of Scotch Whisky were exported to the US last year.

In a statement, Betts 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.   

“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.

“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.”

The Scotch Whisky industry directly employs about 11,000 people in Scotland, and many more indirectly through its supply chain.

Over 7,000 of these jobs are in rural areas of Scotland.

Union boss Gary Smith, the 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. 

“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.”