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Summary
- The US has withdrawn retaliatory tariffs on exports from the UK, which was imposed by former president Donald Trump.
- The US had imposed 25% tariff on several exports from the UK in 2019.
- The move will be a breather for the Scotch Whiskey makers, who were one of the worst affected due the duty.
The new administration in the US, led by President Joe Biden, has announced that it would suspend duties it had earlier imposed on goods from the UK, which include single malt whiskies. In 2019, former President Donald Trump had slapped a 25 per cent tariff on several exports from the European Union (EU) because of a 16-year trade dispute over providing government support to both Airbus and Boeing Co. The duties were imposed in retaliation to the subsidies that were provided to aircraft manufacturer Airbus SE.
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However, there is not much immediate enthusiasm in the spirit stocks. Diageo Plc (LON: DGE) was down 0.60 per cent and was trading at 2,916 pence after opening at 2,922 pence. C&C Group Plc (LON:CRR) was up by 0.71 per cent and was trading at 285.50 pence, after opening at 290 pence. Stock Spirits Group Plc (LON:STCK) was down 0.54 per cent and was trading at 275.50 pence after opening at 277 pence, at 12:55 PM GMT +1 on 5 March 2021.
Both the countries said in a joint statement that they would be suspending tariffs on several products for four months in a bid to de-escalate the ongoing trade tensions.
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For years, both the EU and the US have imposed taxes on each other’s exports. As the UK was formerly a part of the EU, it also made it a party to the issue, as Airbus manufactures parts in the UK and assembles the aircraft in the EU.
Welcoming the announcement, UK Trade Minister Liz Truss said that the move would make it easier for Americans to purchase a bottle of Macallan, Talisker or Glenfiddich, enabling the producers to invest that money in the business and its future. She said that the agreement showed that both countries would work together to rebuild a better trading relationship.
The government also said it would continue to engage with the White House to arrive at a fair settlement over other punitive tariffs in the dispute.
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The tariffs imposed by the US had majorly impacted Scotch whisky producers because the US is an important export market. Since 2019, distilleries reported losses worth £500 million because of the tariffs. Exports to the US fell by a third from the time the tariffs were slapped 16 months ago, according to the Scotch Whisky Association. Distillers of Scotch whisky welcomed the news.
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The trade group’s CEO Karen Betts said that withdrawal of the tariffs would protect the livelihoods of several communities across Scotland. The UK Department for International Trade said that apart from whiskey makers, Scottish cashmere producers, pig farmers, and Stilton cheese makers would also be benefited from the withdrawal of duties.
Prime Minister Boris Johnson also welcomed the truce, saying that it would boost businesses in the UK and would strengthen the ties between the two countries.
