Executive Summary
- The Scotch whisky industry is intensifying its lobbying efforts for the removal or reduction of a 10% US tariff, which costs businesses an estimated £4 million per week, and to prevent the re-imposition of a 25% tariff that was suspended during the Biden administration.
- The US is the largest export market for Scotch whisky, accounting for nearly £1 billion in 2024, and the industry is a cornerstone of the UK economy, supporting 41,000 jobs in Scotland and 25,000 across the rest of the UK.
- The industry argues for a unique exemption due to its inherently Scottish nature and reliance on American oak casks, seeking a resolution to President Trump’s 10% tariff on UK goods, similar to previous tariff reductions on UK car exports.
The Story So Far
- The Scotch whisky industry is intensifying its lobbying efforts against US tariffs because President Trump imposed a 10% tariff on most UK goods earlier this year, impacting the industry which views the US as its largest export market. This current tariff adds to concerns about the potential re-imposition of a 25% tariff on single malt whisky, which was suspended during President Joe Biden’s administration and is set to expire next summer, further threatening a key sector of the UK economy.
Why This Matters
- The ongoing 10% US tariff is severely impacting the Scotch whisky industry, costing businesses an estimated £4 million weekly and creating significant uncertainty for its largest export market. This economic strain is further compounded by the potential re-imposition of a 25% tariff on single malt whisky next summer, highlighting the critical need for a permanent trade agreement to safeguard this cornerstone of Scotland’s economy. The industry’s intense lobbying during President Donald Trump’s visit underscores the broader vulnerability of UK exports to US trade policies and the urgent demand for stable, long-term resolutions to protect jobs and prevent potential price increases.
Who Thinks What?
- The Scotch whisky industry and the Scottish government are intensely lobbying for the removal or reduction of the 10% US tariff on Scotch whisky, which costs businesses an estimated £4 million per week, and seek a permanent agreement to prevent the re-imposition of a 25% tariff on single malt whisky.
- President Donald Trump imposed a 10% tariff on most UK goods, including Scotch whisky, as part of efforts to bolster US industries, with a potential 25% tariff on single malt whisky looming for re-imposition next summer.
The Scotch whisky industry is intensifying its lobbying efforts for the removal or reduction of a 10% US tariff, which currently costs businesses an estimated £4 million per week. This push comes as President Donald Trump visits the UK, with industry leaders and the Scottish government hoping for a favorable resolution to the import taxes on Scotland’s national drink. The US remains the largest export market for Scotch whisky, making the tariff a significant concern for producers.
Current Tariff Landscape and Future Threats
President Trump imposed a 10% tariff on most UK goods earlier this year, citing efforts to bolster US industries. This rate is lower than the 15% tax applied to EU imports. Beyond the current levy, the industry faces the potential re-imposition of a 25% tariff on single malt whisky, which was suspended during President Joe Biden’s administration and is set to expire next summer. The Scotch Whisky Association (SWA) has urged both the UK and US governments to establish a permanent agreement to prevent the higher rate from being reinstated, potentially on top of the existing 10% tariff.
Economic Significance of Scotch Whisky
Scotch whisky is a cornerstone of Scotland’s and the UK’s trade economy. It stands as the largest food and drink export, playing a crucial role in Scotland’s tourism sector. The US market alone accounted for nearly £1 billion in Scotch whisky exports in 2024, according to the SWA. Last year, total whisky exports reached £5.4 billion, underscoring its status as one of the country’s most vital trading commodities.
Employment and Investment
The industry supports a substantial workforce across the UK. In Scotland, over 150 distilleries directly employ 14,000 people, with a total of 41,000 jobs directly and indirectly supported by the sector. An additional 25,000 jobs are sustained across the rest of the UK, highlighting the broad economic impact of whisky production.
Industry’s Case for Exemption
The Scotch whisky industry argues for a unique exemption, asserting that its product is inherently Scottish and cannot be replicated by spirits made in the USA. Producers emphasize their reliance on American oak casks, importing £200 million worth annually for maturing whisky. Furthermore, they note that American distillers share an interest in dismantling tariff barriers to facilitate their own exports of bourbon and tequila.
Global Tariff Comparisons
While US tariffs have impacted the industry, other markets present even higher rates. India’s tariffs on whisky are among the highest globally at 150%, and the Republic of Korea imposes a 25% tariff, according to the World Trade Organization (WTO). However, trading conditions with India are expected to improve following a free trade agreement signed earlier this year. In contrast, major markets such as Australia, the European Union, and Singapore maintain 0% tariffs on whisky imports from the UK.
Broader Tariff Context
Scotch whisky is not the only Scottish alcoholic beverage affected by President Trump’s tariffs; US imports of beer, gin, and other alcoholic drinks also face the 10% rate. The President’s blanket 10% tariff on imports from various countries continues to apply to most UK items. However, a deal struck in May reduced tariffs on key sectors, including UK car exports, setting a precedent for the type of side agreement the whisky industry is now seeking. Other sectors, such as pharmaceuticals, financial services, and machinery and technology, are also lobbying for exemptions or to prevent new industry-specific tariffs from the US.
