Scotch Whisky just got cheaper thanks to easing of tariffs on imports
Good news for scotch whisky fans: the Biden administration recently announced the U.S. has temporarily suspended tariffs for four months on a number of goods produced in the U.K., including single malt scotch whisky. Since October 2019, Scotch coming into the U.S. has been hit with an additional 25 percent tariff.
Increased tariffs were a major component of the Trump administration’s trade policy, with wine and spirits, including the American whiskey industry, bearing the brunt of the dispute. By last June, the industry had already lost $300 million. Total losses for the Scotch whisky industry totaled more than $700 million and according to the New York Times exports dropped by 35 percent over that time and plunged to a 10-year low.
The Scotch whisky industry is understandably relieved at the news as the dispute caused them to lose ground in one of its most important export markets. “This is fabulous news, and our industry is delighted,” says Scotch Whisky Association CEO Karen Betts. “The tariff on single malt Scotch whisky exports to the U.S. has been doing real damage to Scotch whisky in the 16 months it has been in place, with exports to the U.S. falling by 35 percent, costing companies over a half a billion pounds.”
“So today, everyone in our industry – from small companies to large – is breathing a sigh of relief,” she continued. “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 U.S. 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.”
Industry experts and fans alike hope the agreement results in a reduction of Scotch whisky prices in the U.S. now that the imports will no longer be subject to the 25 percent tariff. If distillers and retailers pass those savings onto the customer, Scotch prices could become competitive with American whiskey. The consumption of American whiskey in the U.K. also plummeted during the same period.
In a joint statement, the U.S. and U.K. said, “This will benefit a wide range of industries on both sides of the Atlantic,” and reasoned the tariff suspension, going both ways, would “ease the burden on the industry and take a bold, joint step toward resolving the longest running disputes at the World Trade Organization.”
Meanwhile, Matt Dogali, president of the American Distilled Spirits Alliance, praised the news saying it was a positive first step toward more normal trade relations. “This four-month suspension shows real commitment on the part of both the United Kingdom and United States governments to drawing a line under a recent period of excess protectionism that has hammered the distilled spirits industry, leaving the sector as a whole worse off,” he said in an email statement. “While this suspension only applies to a segment of distilled spirits harmed by this trade war, it is a good first step toward returning to normal trade relations, which we hope can be accomplished before June of this year.”
The tariffs will be suspended for four months while the two sides seek a longer and more permanent compromise. Hopefully consumers will see a difference in prices in the near future.