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Scotch Whisky, English Cheese Prices Could Ease As U.S. Halts Tariffs

Scotch whisky producers are welcoming news of a breakthrough on tariffs, which came as the industry adjusted to both Brexit and then the COVID-19 pandemic. Here, an employee rolls a whisky barrel at the Glenturret Distillery in Crieff, central Scotland, last week.
Scotch whisky producers are welcoming news of a breakthrough on tariffs, which came as the industry adjusted to both Brexit and then the COVID-19 pandemic. Here, an employee rolls a whisky barrel at the Glenturret Distillery in Crieff, central Scotland, last week.

Updated at 10:40 a.m. ET

The Biden administration will suspend steep tariffs on Irish and Scotch whiskies, English cheeses and other products, after reaching an agreement with the U.K. Former President Trump had imposed the tariffs in late 2019 as part of a long-running dispute over the aviation industry.

Scotch whisky and other products had been subject to a 25% tariff. But as of today, the tariffs will be suspended for at least four months. Other products, from pork to cashmere and machinery items, had also been hit by the tariffs that are now suspended. Their damage has been compounded in the past year by the COVID-19 pandemic.

"Trade is key to economic recovery," U.K. Trade Secretary Liz Truss said. She noted that in the year before the tariffs, the U.S. had imported £550 million (nearly $770 million) worth of the affected U.K. goods.

In Scotland, news of the deal prompted a peaty sigh of relief.

"This is fabulous news, and our industry is delighted," said Scotch Whisky Association Chief Executive Karen Betts. She added that the tariffs on single-malt whisky have done real damage in the past 16 months, "with exports to the U.S. falling by 35%, costing companies over half a billion pounds."

In a joint statement, the U.S. and U.K. said that the tariff suspension will "ease the burden on industry and take a bold, joint step towards resolving the longest running disputes at the World Trade Organization."

The dispute involves claims and counter-claims of unfair subsidies and support for two aviation giants: Boeing and Airbus. The U.K. eased its own tariffs on U.S. goods related to the dispute in January, in a bid to "create space for a negotiated settlement" that could end the years-long dispute.

The new agreement does not affect other import taxes that were hiked during the Trump administration's trade war over aluminum and steel. The Distilled Spirits Council of the United States says that while it welcomes progress on some tariffs, "we are greatly disappointed that the U.K.'s debilitating tariff on American Whiskey remains in place."

Exports of American whiskey to the U.K. have declined by 53% — from $150 million to $71 million – since tariffs were imposed in 2018, the industry group said. It added that the U.K. is the fourth-largest market for U.S. whiskey.

When the U.K. announced last December that it would relax tariffs on U.S. rum, vodka and other products when it departed the EU Customs Union and Single Market on Jan. 1, it maintained the 25% levy on American whiskey, the spirits council said.

In October of 2019, the WTO said the U.S. could move ahead with plans to impose tariffs on European goods, to counteract years of loans and illegal subsidies to Airbus. The U.S. tariff list included Scotch and other goods produced in the U.K. — which formally exited the European Union one year ago.

U.K. Prime Minister Boris Johnson touted the deal as proof of the U.K.'s ability to act as an "independent trading nation" rather than as part of the EU.

"I now look forward to strengthening the UK-US relationship, as we drive economic growth and build back better together," Johnson said.

On Thursday, the Office of the U.S. Trade Representative and the U.K. Trade Ministry hailed the tariff breakthrough as a chance to help dozens of industries on both sides of the Atlantic. They also said the deal would help the two countries focus on an increasingly competitive global aviation market, rather than being preoccupied with a lingering dispute.

The deal will give momentum to negotiations for a "balanced settlement" to the Boeing-Airbus fight, they said, adding that the two sides must also address "challenges posed by new entrants to the civil aviation market from non-market economies, such as China."

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