Scotch whisky sales in the US could plummet by as much as 20% in a year because of 25% tariffs that come into force today, the industry has warned.
Karen Betts, chief executive of the Scotch Whisky Association, claimed jobs could be at risk as a result of the levy on imports of single malts to the £1 billion Stateside market.
The United States proposed the tariffs on £6.1 billion of EU exports in retaliation to the bloc’s subsidies to plane-maker Airbus. European cheeses, olives and aircraft have also been targeted by the penalties, which will be paid by importers when goods are being brought across the US border.
It is estimated America represents 10.8% of the global volume of Scotch whisky and 22% of global value.
Betts said: “This is very bad news for our industry. It means Scotch whisky is now paying for over 60% of the UK’s tariff bill for the subsidies it provided to Airbus, eight times more than the next most valuable UK product on the tariff list.
“That single malts are being targeted is particularly damaging for smaller producers, who stand to be the hardest hit. Scotch whisky has been imported tariff-free to the United States for the last 25 years. This move undermines decades of hard work and investment which has seen Scotch whisky sales boom in the US. It will impact both our industry and its supply chain.”
The SWA says the industry could lose as much as 20% of its sales to the US, currently worth £1 billion – in the next 12 months.
Betts added: “In time, consumer choice will diminish and Scotch whisky companies will start to lose market share. In Scotland and throughout our UK supply chain, we expect to see a dropping-off in investment and productivity. Ultimately, jobs could be at risk.”
She urged the UK and Scottish governments to step in and help the industry maintain its competitiveness globally, while continuing work to have the tariffs scrapped.
She said: “We now need the UK and Scottish governments to work together to ensure distillers can weather the storm. We want them to consider a range of support to the industry, including reducing the UK tax burden on Scotch whisky in the autumn Budget. This will provide an important lifeline while efforts continue to remove the tariffs.
“Despite multiple pressures on the UK Government, including Brexit, this issue must not fade from the minds of ministers. Scotch whisky has long been a standout export success. This is now at risk if government strategy does not urgently use all the powers at its disposal to remove these damaging tariffs.”
Diageo, one of the country’s biggest spirits companies, said it will be taking “mitigating actions” to counter the effects of the tariffs and it does not foresee a major impact.
However, a spokeswoman added: “We are concerned about the impact on smaller, independent Scotch distillers and the damage this could do to industry exports and jobs across Scotland.”
Scotland Office minister Colin Clark said he is “deeply disappointed” the tariffs are being imposed.
He added: “The whisky industry is a cornerstone of Scotland’s economy, employing around 11,000 people, many in rural areas. It is one of our greatest exporting success stories, worth more than 1.5 billion US dollars last year in the US alone. We need to ensure this continues and we are in close contact with the SWA to make sure they know how seriously we take this issue.
“The UK Government has raised the issue at the highest levels with both the EU and the US, including with President Trump and will continue to do so until these tariffs are dropped. We will continue to promote Scotch whisky and other produce across the globe and have also provided significant support for the industry in the last two budgets through the freeze on spirit duty.”