Relief as gin spared from US tariff hikes, but battle for Scotch continues

By Jo Gilbert

Published: 13 August, 2020

The US has backed down on its threat to expand a 16-year old trade fight with the European Union to impose tariffs on gin – a move which would have been “hugely detrimental” for the British alcohol industry.

Miles Beale, chief executive of the Wine and Spirit Trade Association, said the turnaround on gin will “come as a huge relief to the growing UK British gin sector which has seen distilleries more than double in number in the last five years”.

However, there remains work to be done on whisky.

“This is the first important step in what should prove to be a closer trading relationship, and should provide the necessary space for constructive discussions between the US and UK governments, and for both administrations to work to remove the remaining tariffs against liqueurs, bourbon and Scotch products – and all wine products affected as well,” Beale said.

According to HMRC, Britain exported £672 million worth of gin in 2019, taking total gin sales to over £3.2 billion.

The war over trade subsidies escalated last year when the Trump administration imposed 15% tariffs on Airbus aircraft and 25% tariffs on other European goods, including Scotch Whisky.

In July, International Trade Secretary Liz Truss warned that the public would lose enthusiasm for a trade deal with the US if President Donald Trump imposes further tariffs on British industry, calling it “hugely detrimental”.

Today she said: “In Washington DC last week I met my opposite number Bob Lighthizer, the US Trade Representative, to warn against new tariffs being imposed on great British products like gin and blended whisky. I am pleased that the US has not applied these additional tariffs, and welcome the decision to lift tariffs on shortbread.

“However, the announcement does not address tariffs that already exist on goods like single malt Scotch whisky. These tariffs damage industry and livelihoods on both sides of the Atlantic and are in nobody’s interests. I am therefore stepping up talks with the US to remove them as soon as possible.”

Last year’s tariffs were imposed following a ruling from the World Trade Organisation (WTO) which sided with the US, allowing up to £6.1bn of tariffs to be applied on EU goods as part of a 15-year dispute with regard to state subsidies for aircraft manufacturers Airbus and Boeing.

In January, whisky industry bodies on both sides of the Atlantic called for their respective governments to stop using tariffs on whisky as a “proxy battle” in unrelated trade disputes.

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