The US Is Suspending Tariffs on Scotch

Is a 17-year tariff issue between the United States and Europe, one that disproportionately damaged the spirits industry, about to be amicably resolved?

It was all the way back on Jan. 5 when this publication posited “Why the Booze Tariff Wars Will Never End.” Long, long story short, this trade tiff that dates back to 2004 began as part of a penalty against an E.U. subsidies program for the aircraft company Airbus. Along the way, whisk(e)y, Cognac, rum and all other sorts of goods unrelated to the aviation industry were slapped with escalating tariffs.

But as The Drinks Business reports, the U.S. and the U.K. have agreed to a four-month tariff suspension, starting March 4. This will “ease the burden on the industry and take a bold, joint step towards resolving the longest-running dispute at the World Trade Organization.”

Some caveats: It’s a four-month pause. And this doesn’t seem to alter other tariffs from (or against) the European Union. Still, several industry groups reacted positively.

“This is fabulous news, and our industry is delighted,” said Karen Betts, Chief Executive of the Scotch Whisky Association, in a statement. “The tariff on Single Malt Scotch Whisky exports to the U.S. 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.” The SWA claims tariffs have created a “lost decade of growth.”

A statement from the Distilled Spirits Council noted that this doesn’t represent a clean slate on the trade front: “[This is] a hopeful sign that a resolution to the tariffs on U.S. & U.K. spirits may be in reach. While we welcome the U.S. decision to suspend the retaliatory tariffs on U.K. distilled spirits for four months, we are greatly disappointed that the U.K.’s debilitating tariff on American Whiskey remains in place. American Whiskey exports to the U.K., our fourth largest market, have declined by 53 percent, from $150 to $71 million since the imposition of tariffs (2018-2020).”

As for consumers: Don’t expect to see too much difference early on during this brief respite, although the willingness of the new administration to seriously address these tariffs could eventually result in lower prices, increased trade and even more brands entering the international market. As Betts of the SWA suggests, “[This tariff pause] 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.”