The US tariff on single malt whisky exports has been suspended for four months, the UK Government has confirmed.
A deal has been struck between the UK’s international trade secretary, Liz Truss, and the new Biden administration in America.
It follows the UK’s decision to suspend tariffs on US products last year.
The 25% whisky tax will be lifted while governments on both sides of the Atlantic try to come up with a long-term solution to a long-running row over subsidies to aircraft manufacturing giants Boeing and Airbus.
A similar US tax on luxury cashmere products, such as those made by Scottish firm Johnstons of Elgin, has also been lifted temporarily.
Announcing the move, Prime Minister Boris Johnson said: “From Scotch whisky distillers to Stilton-makers, businesses across the UK will benefit from the US decision today to suspend tariffs in this dispute.
“It shows what the UK can do as an independent trading nation, striking deals that back our businesses and support free and fair trade.
“I now look forward to strengthening the UK-US relationship, as we drive economic growth and build back better together.”
It shows what the UK can do as an independent trading nation, striking deals that back our businesses and support free and fair trade.”
Prime Minister Boris Johnson
Ms Truss said: “I am delighted to say that our American allies – under their new president and his hard-working staff at the US Trade Representative – have embraced our move to seek a fair settlement.
“This is ‘Global Britain’ in action – securing new opportunities as a newly nimble nation.
“The benefits will be felt across our nation, especially in Scotland, where Scotch whisky distillers will be able to sell at lower prices in the United States, their most valuable market.
“The easier it is for Americans to buy a bottle of Macallan, Talisker or Glenfiddich, the more money those producers will have to invest in their businesses, their staff and futures.”
She added: “Today’s agreement shows that both the UK and the US are determined to work together to build back better and take our trading relationship to new heights.”
Scottish Secretary Alister Jack hailed the US tariff suspension as “great news for the Scottish whisky industry – a cornerstone of Scotland’s economy”.
Mr Jack added: “The UK Government has fought incredibly hard on this issue, petitioning the highest levels of the US administration to remove tariffs which were harming our Scottish exporters.
“We are very pleased to have negotiated an agreement to lift tariffs temporarily, and will use this four-month window to bring an end to the trade dispute.
“I look forward to our close trading relationship with the US going from strength-to-strength, opening up new opportunities for Scottish businesses.”
Great news for the Scottish whisky industry.”
Scottish Secretary Alister Jack
Moray SNP MSP Richard Lochhead said: “ I warmly welcome the long overdue suspension of US tariffs on Scotch whisky and cashmere which will be a huge relief for these important local industries in Speyside and Moray.
“Combined with Brexit and the impact of Covid, these tariffs were damaging the sectors. Hopefully, given the impact of this dispute over subsidies in aviation that has affected the backbone of Moray’s economy can now be settled permanently as it had been dragging on for far too long.”
Orkney and Shetland MP Alistair Carmichael said it “may be a good time for us all to raise a glass to President Biden”.
‘Enormous harm’
Mr Carmichael added: “US tariffs have caused distillers enormous harm since they were imposed by Donald Trump in 2019 and so a respite is welcome.
“It is vital that the government uses the negotiating time that they have to ensure that tariffs are not renewed in the future.
“Whisky is Scotland’s flagship export – despite disruption over the past year, the end of tariffs can only be a good thing as we try to recover.
“With a 23% drop in global exports last year we need to take every opportunity to help our world-class distilleries in the isles to regain lost ground.”
‘Fabulous news’
Scotch Whisky Association (SWA) chief executive 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… in the 16 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. ”
Everyone in our industry – from small companies to large – is breathing a sigh of relief.”
Scotch Whisky Association chief executive Karen Betts
Ms Betts added: “I want to pay tribute in particular to the hard work of Liz Truss. Distillers will certainly be raising a dram to her tonight.”
Whisky industry veteran and co-owner of The GlenAllachie Distillers Company, Billy Walker was surprised by the announcement.
Mr Walker said: “My suspicions were that the new (US) administration would take some time to assess what they had in inherited.
“Those involved in the negotiations from Westminster and Karen Betts at the SWA have played a blinder and they have done an exceptional job for the industry.
“The US market will always be a key and influential market for The GlenAllachie and for the wider Scotch whisky industry.
“The confusion related to tariffs did slow down our progress in the USA, so we are looking forward to getting on with business.”
Union boss Gary Smith, secretary of GMB Scotland, said: “Amid the political backslapping, government and industry should pay tribute to the efforts of those workers on both sides of the Atlantic who fought long and hard to stop these tariffs.
“It should be a moment of reflection for the UK Government, not celebration.
“The economic damage has been done and livelihoods have been lost because Ministers failed to recognise the importance of this industry to Scotland and Britain from the outset of this tariffs war.”
‘Lessons need to be learned’
Mr Smith added: “Lessons need to be learned because whisky and spirits manufacturing is essential to the prosperity of the Scottish economy and it will be a cornerstone of Britain’s post-Covid recovery – it’s that important.
Scottish Chambers of Commerce chief executive Liz Cameron said: “We lift a dram while wearing our cashmere jumpers to those who have worked to suspend these damaging and unnecessary tariffs on key Scottish exports.
“The USA are our allies and a significant buyer of our goods, and the warming of trade relations is an excellent sign.
“We look forward to both governments working together to settle this issue permanently as we narrow in on a trade deal.”
Whisky was the UK’s largest food and drink export in 2020.
But global exports of Scotland’s iconic drink fell by more than £1.1 billion (23%) last year, badly affected by the 25% tax on sales of single malts in the US.
Sales slump
According to the SWA, the export value of Scotland’s national drink in 2020 slumped to £3.8 billion and volumes fell by 13% to the equivalent of 1.14 billion standard 70cl bottles.
The value and volume of exports to most of the top 10 markets fell as countries went into lockdown to combat the spread of Covid-19.
But it was the impact of tariffs on exports of single malts to the US – part of the tit-for-tat transatlantic row over aerospace subsidies – that caused the most significant losses.
Whisky exports to the US fell by 32% last year, to £729 million, a loss of £340m compared to 2019 and accounting for around one-third of total global export losses.
SWA figures suggest the value of exports of single malts to the US have fallen by more than a third – amounting to more than £500m – since the 25% tariff was imposed in October 2019.
Chancellor Rishi Sunak froze alcohol duty in yesterday’s Budget in a move welcomed by SWA, but getting rid of the US tariff will be seen as an even bigger prize for the industry behind Scotland’s national drink.