Scotch Whisky warns US exports could fall 20%

The Scotch Whisky Association (SWA) warned on Friday that exports of Single Malt Scotch Whisky to the US could fall by as much as 20% in the next 12 months as the Trump administration’s 25% tariff on single malts came into effect.

The SWA called for support from the UK and Scottish governments, including a reduction in the UK tax burden on Scotch Whisky in the Autumn Budget.

The US is Scotch Whisky’s largest and most valuable single market with over £1 billion of Scotch Whisky exported there last year.  

The Trump administration recently 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.

SWA chief executive Karen Betts said: “A 25% tariff has today been implemented on US imports of Single Malt Scotch Whisky and Liqueurs.

“This is very bad news for our industry. 

“It means that Scotch Whisky is now paying for over 60% of the UK’s tariff bill for the subsidies it provided to Airbus, eight times more than the next most valuable UK product on the tariff list.

“That Single Malts are being targeted is particularly damaging for smaller producers, who stand to be the hardest hit.

“Scotch Whisky has been imported tariff-free to the United States for the last 25 years. 

“This move undermines decades of hard work and investment which has seen Scotch Whisky sales boom in the US. 

“It will impact both our industry and its supply chain.

“We estimate that 25% tariff on Single Malt Scotch Whisky will see exports to the US drop by as much as 20% in the next 12 months, as Scotch Whisky will become less competitive in the US market. 

“In time, consumer choice will diminish and Scotch Whisky companies will start to lose market share. 

“In Scotland and throughout our UK supply chain, we expect to see a dropping-off in investment and productivity. 

“Ultimately, jobs could be at risk.

“We expect the damage to our industry to mirror the damage caused to exports of American whiskies to Europe since the EU imposed a 25% tariff in July 2018. 

“That tariff has done nothing other than damage an industry very similar to, and closely linked with, our own. 

“Alongside American whiskey companies, we have called on the UK, US and EU governments for many months now to find a negotiated solution to the trade disputes that have given rise to these tit-for-tat tariffs, and to ensure that duty-free trade can resume between the UK and the US to the benefit of whisky producers, their employees, the communities we work in, and consumers everywhere.

“We now need the UK and Scottish governments to work together to ensure distillers can weather the storm. 

“We want them to consider a range of support to the industry, including reducing the UK tax burden on Scotch Whisky in the Autumn Budget.

“This will provide an important lifeline while efforts continue to remove the tariffs.

“Despite multiple pressures on the UK government, including Brexit, this issue must not fade from the minds of Ministers. Scotch Whisky has long been a standout export success. 

“This is now at risk if government strategy does not urgently use all the powers at its disposal to remove these damaging tariffs.”