Whisky sector shudders at US threat to up 25% tariff

The chief executive of the Scotch Whisky Association (SWA) has responded to news that the United States is considering new tariffs on exports from the UK, France, Germany and Spain including Single Malt Scotch Whisky and UK gin, 70% of which is produced in Scotland.

Scotch Whisky exports grew 4.4% to a record £4.91 billion in 2019, with 1.3 billion bottles exported to 180 markets.

However, the recent 25% tariff on the import of Single Malt Scotch Whisky and Scotch Whisky liqueurs into the United States contributed to a 25% fall in exports to the US in the fourth quarter of 2019.

More than 10,000 people are directly employed in the Scotch Whisky industry — with more than 40,000 jobs across the UK supported by Scotch.

A report last year from the SWA said the contribution of the Scotch industry to the UK economy has grown by 10% since 2016 to £5.5 billion.

SWA chief executive Karen Betts said: “The United States’ Government announced yesterday that it is considering whether to impose further tariffs on European spirits, including Scotch Whisky, in connection with the unresolved trade dispute between Airbus and Boeing.

“This is clearly deeply worrying for our industry. 

“The 25% tariff already imposed by the US on Single Malt Scotch Whisky and Scotch Whisky liqueurs has already done significant damage to our industry, with exports of Scotch to the US down by more than 25% since October last year. 

“The tariffs make Scotch uncompetitive in the US against other spirits and companies are losing sales and market share to competitor products. 

“This is hurting the industry at home as well as threatening the livelihoods of Americans who work in distribution, marketing and hospitality in the US.  

“The loss of on-trade sales as a result of the coronavirus crisis is now making a bad situation worse.

“As economies on both sides of the Atlantic struggle to recover from the coronavirus downturn, now is not to the time to hit consumer products once again. 

“Scottish shortbread and cashmere are being damaged too, and British gin – 70% of which is produced in Scotland – is now also under the threat of tariffs. 

“The UK, US and EU must focus quickly and constructively on resolving transatlantic trade disputes before jobs are lost and industries scarred, undermining any ‘bounce back’ recovery from COVID-19.   

“For its part, the UK must use the opportunity of the current trade negotiations with the US to resolve the UK-US aspects of these trade disputes.

“We will now engage with the Office of the US Trade Representative to register our strong opposition to tariffs on Scotch Whisky. 

“We will continue to work in partnership with the American whiskey industry to urge the UK to follow through on the Prime Minister’s commitment to remove EU tariffs on US whiskey as soon as the UK can on leaving the EU. 

“In this we stand shoulder to shoulder with our colleagues in the global spirits industry in calling for all sides to de-escalate and return to zero-tariff trade.”