July 12, 2021

The Distilled Spirits Council of the United States (Discus) is hoping that the only spirits category subject to tariffs between the UK and US will get a reprieve following a consultation that is now in progress.

Discus has submitted official comments to the UK’s Department of International Trade outlining the impact of tariffs on American whiskeys, including bourbon, on both the UK’s hospitality and on the Scotch whisky industry – and urging their immediate removal.

The UK’s imposition of a 25% ‘rebalancing tariff’ on American whiskey makes it the only spirits category that is subject to duties in connection to ongoing transatlantic trade disputes, in this case related to US section 232 steel, aluminium, and derivatives tariffs first introduced in March 2018 by the now-departed Trump administration (click here for the full timeline).

The recent five-year suspension of retaliatory tariffs on UK and US distilled spirits, including Scotch whisky – part of an ongoing WTO Boeing-Airbus dispute – offers some hope of a breakthrough for American whiskeys. Affected categories include Tennessee whiskey, American rye whiskey, and American single malt whiskey.

Low spirits: whiskey imports to UK decline by 53%

In June, following the five-year suspension, outgoing chief executive of the Scotch Whisky Association (SWA) Karen Betts said: “American whiskies remain subject to tariffs on entry into the UK and EU as a result of a separate dispute on steel and aluminium, and we hope these tariffs can also be resolved quickly.”

Data from drinks analyst IWSR show how tariffs can negatively impact a sector. The US whisky category had mixed results in 2020. Single malt Scotch was down 6.1% in volume, the first time on record that the sub-category posted a volume decline in the US. Overall, total whisky volumes in the US grew 5%, led by Japanese, Indian and US whiskies, in that order.

The same effect has been seen in Britain. According to Discus, since the UK first imposed tariffs on American whiskeys in June 2018, exports from this spirits category to the UK have declined by over half (53%) between 2018-2020. The organisation wants a speedy return to bilateral duty-free trading in distilled spirits.

Tennessee whiskey spirits brand Jack Daniels
Tennessee whiskey brand Jack Daniels

In its letter to the Department of International Trade, Discus said: “We encourage the UK government to follow through on Prime Minster Boris Johnson’s November 2019 statement when he said “once we come out of the EU, those tariffs will not apply”.

Discus added: “In addition to the devastating impact on US exporters of all sizes, these tariffs are also harming the Scotch whisky industry, the UK hospitality sector and impeding our progress in addressing shared goals to improve market access for spirits in other key markets.”

Supporting the recovery of UK restaurants and bars

The association claims that eliminating the tariff on bourbon and other American whiskeys will support the recovery of UK restaurants and bars forced to shut down or curtail their business operations during the pandemic.

According to pressure group Bourbon Alliance – a coalition of importers, distributors, hospitality workers and spirits consumers in the UK who are urging the British government to lift tariffs as soon as possible – nearly 10,000 licensed premises in the UK were forced to close in 2020 due to the pandemic.

Discus stated: “The immediate restoration of tariff-free access for bourbon and other American whiskeys is essential to our industry’s ability to recover from the pandemic and support the over 300,000 people jointly employed in the American whiskey and Scotch whisky industries.”

The United States and British distilled spirits sectors are quite interconnected and Discus argues that the re-set of the UK-US spirits trading relationship – kicked off with the five-year suspension – is essential to boosting the spirits trade on both sides of the Atlantic.

The UK Department of International Trade’s consultation on its tariffs in response to U.S. steel and aluminium tariffs ran from 24 May to 5 July 2021. The feedback is now being analysed and the outcome will be published here.

For more on the global alcoholic beverage market click here

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