A Highland whisky distillery says exports from Scotland to the US could become unworkable in the face of looming tariffs imposed by President Donald Trump.
Annabel Thomas, chief executive of Nc’nean Distillery on the Morvern Peninsula, says its recent success exporting to the United States is now under threat.
She said the sector is still reeling from President Trump’s last time in office.
In 2019 he imposed a 25% import tariff on single malt Scotch whisky as part of a wider trade dispute with the EU.
Whisky trade tariffs
It is estimated over £600 million was lost in exports for the Scottish whisky producers -equivalent to losing over £1m a day.
President Joe Biden agreed a five-year suspension on the tariff in 2021, but the clock is ticking on its return. With fears it will be slapped on top of a fresh tariff.
Annabel says Nc’nean whisky has gained strong momentum in the US after entering the market last year. Now that is under threat.
“The annoying thing is it’s going very well, so this would be a real kick in the teeth at a very crucial time in that market development,” she said.
“Having that pulled from underneath us is incredibly frustrating.”
How much could new tariffs be?
Based on Trump’s campaign rhetoric, tariffs could have widespread consequences for the food and drink industry. But the question remains, how much?
“He [Trump] has mooted this 10% tariff on all imports, and I think that 10% is not the end of the world, we would rather it didn’t, but it’s not a ‘stop selling to the US’ scenario,” she said.
“It was 25% last time, specifically on these European geographical indication products.
“That was an enormous deal for Scotch because there is not enough margin in these supply chains to absorb 25%.
“However, it is unclear at the moment which of those he is intending or both.
“Because it’s possible that the 25% comes back and then the 10% gets slapped on top, at which point you are really in disaster zone.”
One strategy is to send Scotch whisky over to the US in advance of new tariffs.
“But that’s not going to last us for a full four-year Trump presidency,” says Annabel.
“That’s a short-term mitigation really. What else do you do? Pull back investment?
“Or use your marketing investment to pay the tariffs instead. Then you have got an unprofitable business.”
Competition from US single malts grows
Alasdair Day of the Hebridean Isle of Raasay Distillery and R&B Distillers, says they weathered Trump’s 25% tariff imposed back in 2019.
But he says the competition from American single malts now poses an additional challenge.
“It’s about having a level playing field,” he said. “I was having a conversation with someone about bourbon not being the same as Scottish whisky.
“But it’s not as simple as that because now American single malt is a thing.”
The master distiller praised the Scottish Whisky Association for lobbying on its behalf, but said that might not be enough to turn the dial.
He added: “I do feel that this is bigger than Scottish whisky. I think this is all non-American food and drink.
“It’s proper protectionism and I know consumers in America like their Irish whiskey, Scottish whisky, Japanese whisky and all the rest of it but I’m not sure it’s the consumer talking.
“The other thing we don’t know is, is this an election promise or just rhetoric? From previous experience I think it is very likely.”
Zero whisky tariff hopes
A spokesperson for the Scottish Whisky Association said Scotch whisky and US whiskey producers are united in a belief in zero-tariff trade between the US and UK.
“Our world-class whiskies have benefited from zero-tariff trade for over a quarter of a century,” said the spokesperson.
“It is in all our interests that our collective energy is focussed on growing our sectors, creating jobs and investment.
“As Prime Minister Keir Starmer has said, the UK and US stand shoulder to shoulder and are partners in enterprise.
“To deepen this partnership, the US and UK administrations should agree to maintain the zero-tariff trade of whiskies across the Atlantic.”
Conversation