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US may ease tariffs on Scotch Whisky to help bourbon industry
Trump administration officials are considering easing tariffs on Scotch whisky after Prime Minister Keir Starmer raised the issue with President Donald Trump at last month's state visit.
The UK has argued the move would benefit the US bourbon industry because it exports used casks to Scotch producers, said the people, who asked to not be identified because the discussions are private.
A final decision to ease the 10% baseline tariff the US applies to whisky has not been made and it's unclear whether Trump will move to reduce duties, one of the people said.
The UK industry says the trade barrier costs it £20 million ($26.9 million) per month in lost exports. At the same time, about 60% of all Scotch is aged in bourbon barrels from Kentucky, accounting for a $300 million trade each year, according to the Scotch Whisky Association.
While the US acknowledged the issue is under consideration, Trump has been broadly hesitant to carve out exemptions — with staff quipping they're tossed out of the Oval Office if they use the word.
Kentucky bourbon is among the iconic American goods that's been targeted in retaliatory tariffs applied around the world. UK officials have been attempting to persuade their US counterparts that by removing trade barriers on whisky, they will in effect be shoring up their own domestic producers.
Securing another exemption to the baseline 10% tariff charged on most exports to the US would be a boost for Starmer, whose efforts to shield the UK from Trump's protectionist measures have been a bright spot in an otherwise rocky 15-month premiership.
“Scotch whisky already enjoys preferential access to the US market compared with other major economies and we will continue to work to ensure this deal protects British jobs and puts money in people's pockets,” a spokesperson for the UK's Department for Business and Trade said in an emailed statement.
The White House and US Commerce Department didn't respond to requests for comment.
The 10% tariff applied to most UK exports to the US is already lower than for many other countries, after Trump slapped so-called reciprocal levies on trading partners based on his administration's estimation of their barriers to trade.
Starmer and Trump first signed a trade deal in May to secure exemptions for certain UK industries, including vehicle producers and steel manufacturers. However steel tariffs are still at 25% — lower than the 50% charged on most countries' exports — as the UK has struggled to get the tariff axed entirely.
While UK steel and Scotch manufacturers had hoped agreements would be reached on loosening trade restrictions during the president's most recent two-day visit to the UK in September, it ended with Trump and Starmer doing little more than reaffirming the trans-Atlantic relationship.
A new deal could benefit companies like Diageo Plc, owner of Scotch whisky brands including Johnnie Walker and Talisker. A spokesperson for the Scotch Whisky Association said that the group was aware of talks last week but declined to share details, citing an evolving situation.
Scottish First Minister John Swinney has also campaigned in Washington and London to remove tariffs. In September the first minister — who leads the Scottish National Party — met with President Trump and Secretary of State Marco Rubio for a 50-minute meeting in the Oval Office.
“During my discussions with President Trump, I made the case to reduce the tariffs on the Scotch whisky industry – something the US industry supports,” Swinney said in a statement, later telling reporters that he thought there was a “real chance” of a deal. Swinney attended a state banquet in London during Trump's state visit.
Scottish and American distillers are interlinked on account of the industry's supply chain, and industry groups on both sides of the Atlantic have argued all sides stand to gain from freer trade. U.S. bourbon producers sell on their used barrels, which are no longer permitted under American rules that require bourbon to mature in new, charred oak casks.
Lifting tariffs on UK spirits would also ease pressure on US bars and restaurants ahead of the key holiday season, said Chris Swonger, chief executive officer of the Distilled Spirits Council of the US. “We remain hopeful that there is a deal in the making,” he said.
Source: Hindustan Times
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