Key figures in the world of Scotch whisky are travelling to the US to hold crunch talks with policymakers amid fears the Trump administration could hike tariffs on UK imports of single malts even higher.
In October, the US started imposing a 25 per cent duty on imports of Scotch whisky and liqueurs, after over two decades of tariff-free trading.
The Office of the US Trade Representative is currently mulling over the current tariff rates, leaving the Scotch whisky sector concerned they could be pushed up further.
Tough tariffs: In October, Trump’s administration started imposing a 25% duty on imports of Scotch whisky and liqueurs
Meetings have been arranged with senior representatives from the US departments of trade, commerce and agriculture, aiming to pile the pressure on Trump’s administration for the removal of whisky from the trade dispute.
Prime Minister Boris Johnson has already vowed to remove tariffs on US whiskey once the UK leaves the EU.
Karen Betts, chief executive of the Scotch Whisky Association, will travel to Washington DC this week to meet key stakeholders to discuss the import tariffs.
‘There’s real concern about a rise in tariffs on Scotch whisky – a further rise could be devastating to distillers’, Betts told the Press Association.
Betts added: ‘We will speak to the US Government and urge them to lift the tariffs altogether – all the tariffs are doing is damaging the sector on both sides.
‘Tariffs on whisky products also has an impact on the American economy.
‘Price rises impact sales, which impacts on investment and jobs, and also has an effect on taxes.’
Promises: Prime Minister Boris Johnson has already vowed to remove tariffs on US whiskey once the UK leaves the EU
Big bucks: Single malt exports across the pond are worth more than £1billion every year
The Scotch Whisky Association has raised fears that the tariffs will lead to a reduction in spirits crossing the Atlantic, putting jobs and investment at risk.
Single malt exports across the pond are worth more than £1billion every year and the country is the industry’s most valuable market.
Rates on Scotch account for 62 per cent of the total UK tariff bill, according to the whisky body.
In October, the US revealed it would impose $7.5billion, or £6.1billion, of tariffs on exports from the EU including scotch whisky, French wine and cheese and aircraft in retaliation for subsidies given to the aerospace group Airbus after a World Trade Organization ruling.
A Department for International Trade spokeswoman said: ‘Retaliatory tariffs cause harm to British businesses and consumers on both sides of the Atlantic.
‘This completely contradicts the more open business environment we are trying to create after Brexit and we have raised the issue at the highest levels of the US administration.’
Meanwhile, Scotland’s Finance Secretary, Derek Mackay, said he was very concerned about the tariff saga.
What has happened?
Here is the Scotch Whisky Association’s overview into when and how these tariffs came about:
‘On 18 October 2019, an advalorem import tariff of 25 per cent on all single malt Scotch whisky and Scotch whisky liqueurs entering the US came into effect.
‘Scotch is now caught up in a multi-dimensional trade dispute between the US and the EU.
‘A 25 per cent EU tariff has applied on US whiskys since July 2018 despite our vocal opposition and calls for this to be removed. This will have contributed to the US decision.
‘The US is the single largest market for Single Malt Scotch Whisky. The value of US imports in 2018 was $516.5million.’
He told BBC Good Morning Scotland: ‘I’m incredibly concerned because it will impact severely, and I think possibly already is, on our exports of whisky and other products to the USA.
‘We’ve tried to engage with the UK Government on this matter. It is of profound concern that the situation might get worse because of the actions of the US administration.
‘We want to see that this trade war, if you like, is removed so that it doesn’t continue to damage Scotland’s economy which it feels as if has been disproportionately targeted by the US administration and that is a matter for the UK Government.’
Asked what the UK Government has been saying, he replied: ‘They tell us, obviously, that they have been trying to apply pressure on the US administration to have this issue resolved which then relates to matters in relation to the EU and the US view on trade subsidies elsewhere.’
After news of the 25 per cent tariff on single malt Scotch whisky broke, the SWA said it expected to see exports to the US drop by as much as 20 per cent over the next year.