U.S.-U.K. trade movement may be good news for bourbon makers

LONDON (WTVQ/AP) — The U.S. agreed Thursday to suspend millions of dollars’ worth of tariffs on U.K. exports including Scotch whisky as part of an effort to resolve a long-running trans-Atlantic trade dispute over aerospace subsidies.

The U.S. government will suspend tariffs for four months on a range of goods, the two countries said in a joint statement, in the latest move to de-escalate trade tensions centered around aid for Boeing and Airbus.

Former U.S. President Donald Trump’s administration had slapped tariffs in 2019 on $7.5 billion worth of European goods in retaliation for state support given to Airbus.

Britain was targeted along with the other three stakeholders in Airbus – Spain, France and Germany – for more tariffs than other countries.

While the action has no immediate impact on exports of Kentucky Bourbon, the Kentucky Distillers’ Association is encouraged.

“This is a good first step and a hopeful signal that the Biden administration is committed to resolving trade wars that have inflicted so much collateral damage on global markets, including Kentucky’s signature Bourbon industry and our broader American Whiskey family,” KDA President Eric Gregory said.

The KDA announced last week that tariffs imposed on U.S. spirits slashed Kentucky Bourbon exports by 35% in 2020, with shipments to the European Union plummeting by nearly 50%.

Sales to the U.K., formerly Kentucky’s largest market in the EU, also have been decimated by 50%.

Today’s U.S.-U.K. announcement temporarily removes tariffs on Single Malt Scotch, Single Malt Irish Whiskey, liqueurs and cordials and certain wines originating from the U.K. The U.K. eliminated retaliatory tariffs on U.S. rum, brandy and vodka involved in this dispute in January.

However, the U.K. and other E.U. countries continue to maintain tariffs on American Whiskey in response to the two-year trade war on steel and aluminum.

“We strongly believe this dispute deserves similar priority in finding a resolution before more long-term damage is done,” Gregory said.

“With a focused settlement to help the aerospace industry now underway, the KDA reiterates its call for an immediate suspension of disastrous tariffs in the steel and aluminum dispute that have ensnared unrelated American whiskey and key agricultural exports.”

Gregory said the KDA agrees with the U.S.-U.K. statement Thursday that noted a settlement in the aerospace dispute will benefit a wide range of industries on both sides of the Atlantic.

“We look forward to a return to open trade with all industries involved as we seek to bring stability back to our Kentucky Bourbon and American Whiskey export markets during these challenging and unprecedented times.”

The EU retaliated with tariffs on up to $4 billion of U.S. goods over subsidies to Boeing, but the U.K. offered an olive branch to the U.S. by announcing it would suspend tariffs from January, an offer that President Joe Biden’s administration has now moved to reciprocate.

“This will allow time to focus on negotiating a balanced settlement to the disputes, and begin seriously addressing the challenges posed by new entrants to the civil aviation market from non-market economies, such as China,” the joint statement said.

Distillers of Scotch whisky — the U.K.’s largest food and drink export last year — cheered the news that the 25% tariff would be cut to zero.

Scotch exports to the U.S. fell by a third since the tariffs were imposed 16 months earlier, costing the industry more than half a billion pounds, the Scotch Whisky Association said.

“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,” said the trade group’s CEO, Karen Betts.

Scottish cashmere producers, pig farmers, and Stilton cheese makers will also benefit from the suspension of tariffs, the U.K. Department for International Trade said.

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