President Trump's E.U. tariffs take effect tomorrow. Here's what Scotch producers are doing to prepare.

By Mike Pomranz
October 17, 2019

Tomorrow is "T-Day" for single-malt Scotch. The long-discussed but only recently confirmed Trump administration tariffs on a bevy of products from the European Union—which also includes things like wines and cheeses, coffees and juices—are set to take effect on October 18. On Monday, the World Trade Organization officially put its stamp of approval on these new import duties, agreeing that the U.S. had a right to retaliate over E.U. subsidies for the aircraft manufacturer Airbus. But that decision was a formality: Speaking with wine importers last week, they had already begun moving ahead as if the tariffs were a certainty.

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As for Scotch producers, apparently, they'd already started taking action as well. The Financial Times reports that some single malt Scotch producers (only single malts were included in the somewhat haphazard list of taxed items) had taken the unusual measure of shipping whisky to the U.S. by air to make sure it arrived across the pond before the October 18 deadline. Typically, Scotch—which is already aged for years—is sent to the States by sea since it's in no rush to get here. Anthony Wills, founder of the Islay-based Kilchoman distillery, told the paper he bit the bullet on 3,000 bottles of Scotch, paying about double his usual shipping to send them by air earlier this month. He said shipping by plane probably increased cost about 10 percent, but that's still less than the 25 percent tariffs. "Shipping by air is expensive, but it might make sense to do that for higher-end stuff," Chris Rogers of trade data company Panjiva told the Financial Times.

But even larger companies like the drinks giant Diageo were preparing for these tariffs, too, though they didn't delve into specifics. "We will be taking measures to mitigate the effect of these tariffs on our Scotch Single Malts and Liqueurs portfolio," a Diageo spokesperson told me via email. "As a result, we do not expect a material impact to our business. We continue to closely monitor this dispute and would not be immune from a further escalation." Diageo's single malt Scotch brands include Lagavulin, Talisker, and Glenkinchie.

And yet, Diageo—a multi-billion dollar company that also owns brands like Smirnoff and Guinness—knows it has the resources to get through a pesky trade war. Even they, however, voiced their worries about small producers like Kilchoman. "We are concerned," the spokesperson continued, "about the impact on smaller, independent Scotch distillers and the damage this could do to industry exports and jobs across Scotland."

Perhaps a silver lining is that these tariffs may have provided a temporary boost for the air cargo industry—though that would be a bit ironic seeing as the whole point of the tariffs was in retaliation against Airbus. No one ever said trade wars had to make any sense.

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