Free Trade

U.S. Lifts Tariffs on Scotch Whisky, but American Distillers Remain on the Rocks

The announcement signals a possible deescalation in the transatlantic trade war and raises hopes for a U.S.-U.K. trade agreement.

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Go ahead and finish off that bottle of Laphroaig, because a temporary reprieve in tariffs on imported Scotch whisky likely means relief for American consumers beset by high booze prices.

Perhaps more importantly, the announcement on Thursday that the United States would suspend those tariffs demonstrates that the Biden administration is looking to de-escalate trade conflicts with American allies, even though it has signaled an unwillingness to roll back the Trump administration's broad tariffs on steel, aluminum, and goods made in China. In a joint statement, the American and British governments said they would use the four-month suspension of tariffs as an opportunity "to ease the burden on industry and take a bold, joint step towards resolving" a long-running dispute over subsidies for airplane manufacturers.

That conflict dates back to the Bush administration, but it came to a head during the Trump years. In 2019 the Trump administration imposed a series of tariffs on European cultural goods, including Scotch whisky and French cheeses, in response to what the U.S. sees as unfair European Union subsidies for Airbus, a European airplane manufacturer.

But the United Kingdom is no longer part of the European Union. In January, the British government announced that it was lifting retaliatory tariffs on American goods imposed as part of the Airbus dispute. This week's move by the Biden administration is a tit-for-tat de-escalation.

The move is also a clear win for British Prime Minister Boris Johnson, who said in a statement that it "shows what the U.K. can do as an independent trading nation, striking deals that back our businesses and support free and fair trade." The American tariffs had put a serious dent in Scotch whisky exports to the U.S., which had dropped 37 percent in 2020 according to data tracked by the Distilled Spirits Council of the United States (DISCUS), an industry group.

But while Scotch distillers and American drinkers might cheer the removal of U.S. tariffs, American whiskey will still be subject to 25 percent tariffs levied by the U.K. and E.U. governments. Those tariffs are not connected to the Airbus dispute but were imposed in response to the Trump administration's tariffs on steel and aluminum, which remain in place.

American whiskey exports to the U.K. have fallen by 53 percent as a result of those tariffs, according to DISCUS' data, costing distillers $79 million in sales since 2018.

White House Press Secretary Jen Psaki said Thursday's announcement was meant to "create space for a negotiated settlement to the Airbus and Boeing disputes," but declined to comment on what the next steps might be.

On Friday, the U.S. and E.U. announced a similar four-month suspension of tariffs related to the dispute over airplane manufacturing subsidies. In addition to suspending the tariff on Scotch whisky, the U.S. will now suspend tariffs on liquors and cordials imported from Germany, France, Ireland, Italy, and Spain. Meanwhile, the E.U. will suspend tariffs targeting American rum, brandy, and vodka. The E.U. tariffs on whiskey, imposed in response to Trump's tariffs on steel and aluminum rather than as part of the spat over airplane subsidies, will remain in place.*

In a statement, DISCUS urged the Biden adminstration to "build on this positive momentum by negotiating an agreement to simultaneously eliminate retaliatory tariffs on all distilled spirits, which will benefit hospitality businesses on both sides of the Atlantic that are struggling to recover and rebuild from the global pandemic."

The clock is ticking. European and British tariffs on American whiskey will automatically rise from 25 percent to 50 percent in June unless an agreement is reached.

The tangled mess of booze tariffs on both sides of the Atlantic provides a useful demonstration of the damage that trade wars can cause. Distillers have been caught up in a series of costly trade conflicts that have little, if anything, to do with their businesses. Consumers in America should cheer for this latest development, but Biden has more work to do unwinding these counterproductive trade policies so the whisk(e)y can flow freely.

*UPDATE: This story was updated on Friday afternoon to include details of the U.S.-E.U. tariff suspension agreement. 

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  1. But while Scotch distillers and American drinkers might cheer the removal of U.S. tariffs, American whiskey will still be subject to 25 percent tariffs levied by the U.K. and E.U. governments.

    “Stop fucking us, and we’ll stop fucking you. Deal?”
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    Welcome to reality.

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    2. Eric thinks free trade is when Americans get fucked only.

      1. Basically.

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  3. Don’t care I drink Kentucky bourbon.

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  4. In January, the British government announced that it was lifting retaliatory tariffs on American goods imposed as part of the Airbus dispute. This week’s move by the Biden administration is a tit-for-tat de-escalation.

    Implying that Orange Man wouldn’t have also dropped the tariff?

  5. Good. End all of the trade war nonsense from Trump except for China. Smother China in its cradle. All new trade negotiations must have China exclusion as an objective. No trade until they play by the rules. No more industrial and academic espionage. No more currency fixing. No more illegal fishing. No more damming of the Mekong. Human rights for Uighurs and Hong Kong. Etc. Etc.

    If they want to be the world’s manufacturer, make them earn it with something more than a simple willingness to be inhuman.

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    2. Hey. You finally read something and now understand China isn’t a free trade actor. Congratulations. You’re not completely retarded.

  6. I’ve noticed that all Reason articles (and other left wing propaganda) opposing tariffs condemn the US for imposing tariffs, but almost never criticize other countries for imposing tariffs on American goods and services (or worse, fail to even acknowledge that many countries impose many tariffs on American goods and services).

    Nearly all (and perhaps all) tariffs that Trump imposed were in retaliation to those countries’ tariffs on American goods and services.

    1. Were it not for tariffs and other market protectionism, Scotch would have been snuffed out into obscurity over a hundred years ago. It would be somewhere on par with Irish Whiskey, which is somewhere on par with mouthwash.

      These tariff articles are never about free markets, but about subordinating American markets to the whims of market manipulators abroad.

      Europe is never going to lift tariffs on American booze, and Boehm knows that.

    2. yeah, those countries are shooting American producers in the foot, so the USA will shoot American consumers in the foot.

  7. Maybe OBL is right…. (D) is the party of billionaires.

  8. Taking that bold step into global imports, whisky generally refers to Scottish brew (and Japanese or Canadian, too), while whiskey refers to the American or Irish liquor. This was obviously a thing.

  9. Lets not forget how the “Chicken tax” is hurting American consumers at their local VW and Audi dealerships.

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