U.S. Temporarily Suspends Tariff on Scotch Whisky
Increased tariffs were a major component of the Trump administration's trade policy—with plenty of foods and beverages getting dragged into the trade war. Wine and spirits were hit especially hard, including the American whiskey industry, which suggested last June that the dispute had already cost them $300 million.
The hope has been President Biden would change course, but the wine industry received some discouraging news last month that his administration would not be making any immediate changes. However, finally, the first bit of good news for the alcoholic beverage industry, and possibly indication of a larger shift: Yesterday, the U.S. announced they would reciprocate a move made by the United Kingdom—which ditched tariffs on U.S. goods when they left the E.U. on January 1—and America would suspend retaliatory tariffs on British products for at least four months. And today, the U.S. and Europe agreed to lift tariffs on billions of dollars of each others' food, wine, and other products, for an initial period of four months.
Though the new arrangement with the UK will benefit a number of British products, Scotch whisky is the most high-profile item of the bunch. Scotch coming into the U.S. has been hit with an additional 25 percent tariff since October 2019, and exports of the world's most coveted booze has dropped by 35 percent over that time, according to the New York Times. Creating even more frustration, spirits are simply collateral damage: The original dispute stems from the aerospace industry over subsidies to Boeing and Airbus.
"This will benefit a wide range of industries on both sides of the Atlantic, and allow for focused settlement negotiations to ensure that our aerospace industries can finally see a resolution and focus on COVID recovery and other shared goals," the two countries said in a joint statement released by the Office of the United States Trade Representative.
Meanwhile, Matt Dogali, president of the American Distilled Spirits Alliance, was optimistic about the news. "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 in both countries, leaving the sector as a whole worse off," he said in an emailed statement. "While this suspension only applies to a segment of distilled spirits harmed by this trade war, it is a good first step towards returning to normal trade relations, which we hope can be accomplished before June of this year."
Dogali also pointed out that a four-month suspension isn't arbitrary: On June 1, tariffs on some American distilled spirits sent to the U.K. are slated to double to 50 percent. He added, "If on June 1, tariffs go up to 50 percent, it is likely that the United States Trade Representative will respond in-kind and the currently volatile and uncertain trade situation impacting the beverage alcohol industry will continue, erasing any gains from the action announced yesterday."