UK ‘stepping up’ trade talks after US retains Scotch whisky tariff

The UK’s international trade secretary said on Thursday that she was planning on “stepping up” trade talks with the US after it chose to retain punitive tariffs on Scotch whisky, warning that the levies harmed interests in both countries.

Welcoming the decision of the US not to impose additional tariffs on products such as gin and blended whisky, Liz Truss nonetheless noted that tariffs on existing goods, such as those on single-malt Scotch whisky, remained in place.

“These tariffs damage industry and livelihoods on both sides of the Atlantic and are in nobody’s interests. I am therefore stepping up talks with the US to remove them as soon as possible,” Truss said.

The tariffs were first introduced as part of long-running spat with the EU about state aid involving Airbus (AIR.PA) and American rival Boeing (BA).

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The World Trade Organization ruled in December 2019 that 2004 subsidies given to Airbus by the EU were illegal, prompting the US to impose hefty tariffs on $7.5bn (£6bn) worth of goods from the bloc.

The Scotch Whisky Association warned on Thursday that the 25% tariff had led to losses of around £300m ($393m) for the industry since it was introduced.

“The tariff is inflicting huge damage on the Scotch Whisky sector, with exports to the U.S. down 30% since the tariff came into effect,” chief executive Karen Betts said.

Scotch whisky contributes some £5.5bn to the UK economy, and supports more than 42,000 jobs across the country, including 10,500 people directly in Scotland, according to the association.

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Truss last week flew the US to hold talks with United States trade representative Robert Lighthizer and other key officials.

The UK government said on Thursday that Truss had pledged to hold further talks with Lighthizer to step up pressure on the tariff issue.

Though the EU has taken steps to resolve the dispute, the bloc warned last month that it would take action if the US imposed new tariffs.

“I want to reassure people that we are ready to act decisively and strongly on the European Union side if we don't get the type of outcome that we expect from the United States in relationship to finalising this 15-year-old dispute,” said Phil Hogan, the bloc’s trade commissioner.