By Scott Wright

TARIFFS on single malt Scotch whisky in the US introduced by the Trump administration have now cost the industry half a billion pounds in lost exports, new figures show.

Pressure is now mounting on the UK Government to thrash out a deal with President Joe Biden to bring the damaging tariffs to an end, amid fears it could lead to an irrevocable loss of market share for the industry in its biggest overseas market.

The import tax is also said to be risking investment and employment in the Scotch whisky industry, and hitting smaller producers disproportionately hard by making their products less competitive versus other spirits in the US.

The 25 per cent tariff was applied by Washington to a range of Scottish products in October 2019 as a retaliatory move in a long-running trade dispute between the US and European Union (EU) over aircraft subsidies.

While the tariff was removed from shortbread last year, it continues to be applied to single malt whisky, whisky liqueurs and textiles such as cashmere.

Figures released by the Scotch Whisky Association (SWA) today reveal that exports of single malt to the US have plunged by 35 per cent since the tariffs on single malt were introduced, meaning the controversial tax has now cost the industry £500 million in lost exports in the last 15 months.

READ MORE: Scott Wright: Whisky industry right to be furious as Government fails to stop damaging tariffs

The SWA is today urging the UK Government to call for the immediate suspension of tariffs on sectors not related to the ongoing dispute over aircraft subsidies.

With the UK no longer a member of the EU, it has also called on the Westminster Government to reach a bilateral deal with the US on aerospace subsidies that is compliant with World Trade Organization rules.

It notes that only then can the tariffs be lifted permanently.

The dispute centres on subsidies given by European countries, including the UK, to Airbus, and by the US to Boeing.

Karen Betts, chief executive of the SWA, said the “current situation is unsustainable” for the industry. “It’s very hard for Scotch whisky producers to understand why the UK Government is so unwilling to address the UK violations of WTO rules on aerospace subsidies at the root of the tariffs, ” she said. “Distillers are suffering terrible losses and still the Government, after 16 years of unsuccessful litigation, is unprepared to take the necessary steps to ensure subsidies comply with the UK’s international obligations.

READ MORE: Trump tariffs delay Scotch distiller's US expansion

“The UK Government must now act urgently and call for the immediate suspension of all tariffs on unrelated sectors and, at the same time, redouble efforts with the new US administration to resolve the aerospace dispute and lift tariffs permanently.”

Patricia Dillon, managing director of Speyside Distillery, said: “These tariffs continue to have a disproportionate impact on smaller distillers, who continue to pay hand over fist for subsides to aircraft manufacturers. Jobs in rural parts of Scotland, not to mention across the UK supply chain, are at risk.

“What baffles us is that the UK Government seems willing to sacrifice the Scotch whisky industry because they are unwilling to make the necessary decisions to end a trade dispute not of our making. This has gone on long enough.”

Fraser Thornton of Distell International, owner of the Bunnahabhain, Deanston and Tobermory single malts, said the industry is “deeply disappointed” the tariffs remain in place, with the industry having seen hopes of a “mini deal” between the UK and US dashed last month.

He added: “Whatever stopped the UK Government from agreeing a deal that would have ended tariffs on Scotch whisky must be ironed out so that swift progress can be made with the incoming US administration. The Scotch whisky industry cannot continue to pay the price for a trade dispute which has nothing to do with our sector.”

The ongoing challenges posed by tariffs come as the industry battles to overcome restrictions to stop the spread of coronavirus in the travel retail sector and hospitality trade around the world. The SWA has called on the UK Government to support the industry to help offset the impact.

Ms Betts added: “As part of this, the Chancellor must deliver a package of support for the industry, including a cut to spirits duty in next month’s budget.”

Chancellor of the Exchequer Rishi Sunak will deliver the Budget on Wednesday March 3.

Business Voices, P22