After months of bluster, President Trump has finally announced his far-reaching tariff plans in what he is calling the United States’ ‘Liberation Day’.
On Wednesday 2nd April it was revealed that the US will impose a minimum 10% tariff on good from around the world, with the so-called “worst-offenders” facing an additional levy.
Goods made in the UK will face a 10% tariff and the EU will take a 20% hit. Japan and China will also face tariffs of 24% and 34% respectively. These tariffs are set to be enforced from 9th April 2025.
Once again the spirits industry is in the firing line. Drinks produced around the world are one of the many goods targeted in Trumps plans. Additionally, items used for packaging such as glass, corks, and other specialist goods will be affected.
Predictably, the Scotch whisky industry has reacted to the news with despair.
The US is a hugely significant market for Scotch whisky, believed to be worth £971 million annually. When Trump introduced a 25% tariff in 2019, it was estimated that it cost the Scotch whisky industry £600 million in lost sales for the 18 months the tariff was in place.
Trade body the Scotch Whisky Association (SWA) has responded to the tariff news: “The industry is disappointed that Scotch whisky could be impacted by these tariffs. We welcome the intensive efforts by the UK government to reach a deal with the US administration, and we continue to support this measured and pragmatic approach towards a mutually beneficial resolution.”
This sentiment is echoed by Anthony Wills, founder of Kilchoman distillery on Islay. He called the tariffs “a huge blow for the industry.” He added that the US “represents 10% of our sales. So it's clearly going to be a big blow, especially with the current economic headwinds that we're all experiencing, we're all going to find this very difficult and very challenging.”
Wills has said that he is investigating the possibility of absorbing the costs of the additional tariffs so prices stay the same for his customers in the US. However, even if this is possible it will not be a sustainable, long term strategy. And of course, this route won’t be realistic for all producers.
The secondary market is also affected by the news. Online auction house Whisky Hammer have announced that they will temporarily be suspending all shipments to the US as they navigate the new situation.
Beyond Scotland, the Irish Whisky Association (IWA) has also commented on the impact this could have on the Irish industry. The US accounts for 41% of all Irish whiskey exports and is worth around €865 million per year.
The IWA simply states that “should an appropriate resolution not be found, this tariff may have a detrimental effect on the position of the category in the US market, undoing decades of success and growth.”
News of the tariffs has proven to not be overwhelmingly popular Stateside as well. Chris Swonger, president and CEO of Distilled Spirits Council of the US (Discus) has issued a statement calling for a return to tariff free trade between the US and the rest of the world.
He said: “The US spirits sector has been the model of success for fair and reciprocal trade for decades. During the time that we had zero-for-zero tariffs with 51 countries, our industry flourished, benefiting US distillers, farmers and the wider hospitality industry.
“A return to zero-for-zero tariffs with our key trading partners will enable the 3,100 distillers across the United States to partake in the limitless growth opportunities that exporting has to offer.”
The EU have already threatened retaliatory tariffs on US goods, including bourbon, and it’s likely other governments will follow suit. This could be damaging for the whole US spirits industry. Exports of US spirits were worth US$2.2 billion in 2023; 63% of this was American whiskey.
President Trump finally confirming these tariffs might feel like the end of weeks and months of posturing and threat-making. However, this is just the beginning of the story. What comes next will be months or years of global market uncertainty.
For the whisky industry, the worst case scenario will be drastically reduced exports and declining sales leading to widespread closures and job losses - not just in Scotland but around the world.
Hopefully it doesn’t come to that. Trade bodies on both sides, such as Discus and the SWA, have long been encouraging the powers that be to find a solution that won’t undermine an otherwise thriving, global industry. No doubt they will now be doubling their efforts to resolve this trade dispute and mitigate against its inevitable negative impact.
