The UK and the US have agreed a four-month suspension of retaliatory tariffs imposed on UK goods such as Scotch Whisky over a long-running aircraft subsidy row.

Both sides have pledged to use the time to try and resolve the dispute.

The trade dispute has cost the Scotch Whisky industry over £500 million in lost exports.

“The United Kingdom and the United States are undertaking a four-month tariff suspension to ease the burden on industry and take a bold, joint step towards resolving the longest running disputes at the World Trade Organization,” a joint statement said.

“This will allow time to focus on negotiating a balanced settlement to the disputes, and begin seriously addressing the challenges posed by new entrants to the civil aviation market from non-market economies, such as China.”

Washington will temporarily halt tariffs on a range of goods, cutting the 25% tariff rate on Scotch whisky to 0% for four months, according to the UK’s Department for International Trade.

Scotch Whisky Association CEO Karen Betts said: “This is fabulous news, and our industry is delighted.

“The tariff on Single Malt Scotch Whisky exports to the US has been doing real damage to Scotch Whisky in the sixteen months it has been in place, with exports to the US falling by 35%, costing companies over half a billion pounds.

“So today, everyone in our industry – from small companies to large – is breathing a sigh of relief.

“Suspending these tariffs – stemming from a transatlantic trade dispute that had nothing to do with us – and a return to tariff-free trade with the US means livelihoods and communities across Scotland will be protected.

“It means that companies can now really focus on recovery – on building back the American market as well as on building back global exports hit by the coronavirus pandemic …

“The UK government and the new US administration will now need to work hard on finding a negotiated settlement to this long-running aerospace dispute.

“We hope too that both governments will be able to find a rapid, pragmatic solution to the steel and aluminium dispute which still impacts US whiskey exports to the UK.”

Ivan Menezes, chief executive of whisky and drinks giant Diageo plc, said: “Today is a very good day for Scotch and Scotland …

“Final resolution of the aerospace dispute, combined with the announcement of a continued freeze on spirits duty in yesterday’s Budget, will safeguard thousands of jobs across Scotland and the UK.”