The White House has agreed to suspend retaliatory US tariffs on UK exports including scotch whisky, raising hopes of improved relations as talks continue about a post-Brexit transatlantic trade deal.
In 2019, then US president Donald Trump imposed a 25% tariff on a range of EU exports, as part of a 16-year trade dispute over state support for aerospace rivals Boeing and Airbus.
Estimates released last month suggested the duty had led to a £500m dropoff in sales of Scottish single malt alone.
But the Department for International Trade (DIT) said on Thursday the Biden administration had suspended the tariff. The move followed the UK scrapping punitive measures against Boeing in January.
“The easier it is for Americans to buy a bottle of Macallan, Talisker or Glenfiddich, the more money those producers will have to invest in their businesses, their staff and futures,” said the trade minister Liz Truss. “Today’s agreement shows that both the UK and the US are determined to work together to build back better and take our trading relationship to new heights.”
The rapprochement, which was first reported by the Spectator, will also result in tariffs being lifted on a range of goods, including £11m of cashmere, £38m of pork products and £45m of cheese, the DIT said.
“From scotch whisky distillers to stilton-makers, businesses across the UK will benefit from the US decision today to suspend tariffs in this dispute,” said Boris Johnson.
The government said it would continue to seek a “fair settlement” with the White House that removed all remaining punitive tariffs related to the dispute to boost the UK’s aerospace industry.
It added that officials on both sides of the Atlantic were working on an ambitious trade deal that could remove £500m of tariffs.
Business lobby group the Confederation of British Industry said it hoped the decision would pave the way for more cordial trade relations between the US and the post-Brexit UK.
“The duties on these goods were harming business and consumers on both sides of the Atlantic,” said director general Tony Danker.
“This positive step must now lay the foundations for talks at pace to resolve the dispute once and for all. This dispute is lose-lose for all involved at a time when business is suffering from the pandemic, global trade and investment is crucial for economic recovery.”
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The move puts the UK at odds with the EU, which imposed retaliatory tariffs on US imports worth $4bn (£3bn) after the World Trade Organization ruled the US had given illegal state aid to Boeing. The dispute stretches back to 2006, when the US complained that Airbus was receiving subsidies that put Boeing at a competitive disadvantage.
Drinks industry figures welcomed an end to tariffs that have proved a drag on sales.
“Today is a very good day for Scotch and Scotland,” said Ivan Menezes, the chief executive of Diageo, which owns brands including Johnnie Walker and Talisker. “Final resolution of the aerospace dispute, combined with the announcement of a continued freeze on spirits duty in yesterday’s budget, will safeguard thousands of jobs across Scotland and the UK.”
The Scotch Whisky Association (SWA) said tariffs had done “severe damage” to distillers over the 16 months they were in place.
“Today, everyone in our industry – from small companies to large – is breathing a sigh of relief,” said the SWA chief executive, Karen Betts.
But while British drinks firms celebrated, the Distilled Spirits Council of the US said American whiskey distillers were still losing out and called for further action to prevent lost sales.
“While we welcome the US decision to suspend the retaliatory tariffs on UK distilled spirits for four months, we are greatly disappointed that the UK’s debilitating tariff on American whiskey remains in place,” said a spokesperson.
“American whiskey exports to the UK, our fourth largest market, have declined by 53%, from $150m to $71m, since the imposition of tariffs.”