TRUMP'S tariffs on Scotch whisky suspended
REGULATION INITIALLY APPLIES FOR FOUR MONTHS
03 March 2021 brought in great news for British exporting
companies in that the US has suspended the retaliatory tariffs on imports of
British goods, including
Scotch whisky, for the next four months. The caveat is that during this time,
existing disputes between the USA and Great Britain must be resolved. The decision
by Trump came about after that person’s thoughtless decision on stultifying
tariffs resulting from EU subsidies for aircraft manufacturer Airbus, in which
the US saw competitive disadvantages for their Big-tech aircraft manufacturer
Boeing.
The Scotch Whisky Association (SWA) squarely blamed the 25%
US tariffs introduced sixteen months ago for the sharp decline in Scottish
exports last year as reported, and has repeatedly called on the British
government to stand by the distilleries.
Reacting to the Biden Administration’s decision, SWA breathed
a sigh of relief. Suspending these tariffs – stemming from a transatlantic
trade dispute that had nothing to do with the whisky industry – and a return to
tariff-free trade with the US means livelihoods and communities across Scotland
will be protected. Companies can now really focus on recovery – on building
back the American market as well as on building back global exports hit by the
coronavirus pandemic.
Scotch whisky export figures for 2020 have now been released,
with the industry experiencing a ‘lost decade of growth’ as tariffs and Covid
hit exports hard. Compared to Scotch whisky, other spirits categories,
including tequila, mezcal, Cognac and American whiskey, performed positively in
the US market during 2020, according to a report
released by the Distilled Spirits Council of the United States.
Global exports of Scotch whisky fell by more than £1.1bn
during 2020, according to figures released today by the Scotch Whisky
Association (SWA). The export figures are the lowest they have been in a
decade, as the combined impact of Covid-19 and the 25% tariff in the United
States hit distillers hard.
In 2020, the export value of Scotch whisky exports fell 23%
by value to £3.8bn. The number of 70cl bottles exported fell by 13% to the
equivalent of 1.14bn.
The value and volume of exports to most of Scotch whisky’s
top 10 markets fell as countries went into lockdown to combat the spread of
Covid-19 during 2020. The closure of hospitality and travel restrictions
impacting airport retail globally saw export values fall in 70% of Scotch whisky’s
global markets vis-a-vis 2019. Exports to the EU 27, the industry’s largest
regional export market, fell by 15%.
The continued impact of tariffs on exports of
Single Malt Scotch whisky to the United States caused the most significant
losses. The United States is Scotch whisky’s most valuable market, valued at
over £1bn in 2019 when it accounted for a fifth of global exports. In 2020,
exports of Scotch whisky to the US fell by 32% to £729m, a loss of £340m
compared to 2019, and accounting for around one third of total global export
losses.
The industry repeated calls for more support for Scotch whisky
distillers in the UK budget on 03 March seem to have done the trick, even if
vicariously. Export losses to the US are in large part a result of the 25%
tariff on Single Malt that the industry is forced to pay, because of a
continuing dispute between the EU, UK and US governments over subsidies granted
to Airbus and Boeing. Given the tariff
has arisen as a result of UK government aerospace policy, the SWA called on the
Chancellor to cut spirits duty to mitigate the significant damage being done to
the industry.
The Scotch Whisky Association added that these figures were a
grim reminder of the challenges faced by distillers over the past year, as
exports stalled in the face of the coronavirus pandemic and US tariffs. In
effect, the industry lost 10 years of growth in 2020 and it’s going to take
some time to build back to a position of strength.
In these challenging times, what was most disappointing was the damage being caused by US tariffs. The US has been, for decades, Scotland’s strongest and most valuable
market, but Scotch whisky is now losing considerable ground there. These tariffs were avoidable had the UK, EU
and US governments and the European and American aerospace industries been less intransigent. That governments and companies allowed their dispute to continue while the livelihoods of real people, and the future of one of Scotland’s oldest industries, were put at stake reflected badly on them.
2020 Export Summary
- Export value of Scotch Whisky in 2020 was £3.8bn, down £1.1bn compared with 2019
- Export volume of Scotch Whisky in 2020 was the
equivalent of 1.14bn 70cl bottles, down 12.6% compared with 2019
- Exports have fallen in 127 of 179 global markets
- Exports by value are now at their lowest level since 2010 when £3.48bn was exported
- Scotch Whisky exports to the US were valued at £1.07bn in 2019 – the industry’s first billion pound market
- In 2020, exports of Scotch Whisky to the US fell by 32%, or £340m
- Since the 25% tariff was imposed in October 2019, Scotch Whisky exports to the US have fallen 35% or £542m
- Compared to Scotch Whisky, other spirits categories, including tequila, mezcal, Cognac and American whiskey, performed positively in the US market during 2020, according to a report released by the Distilled Spirits Council of the United States.
US Tariffs Impact
TOP 10 MARKETS
The largest export destinations for Scotch Whisky (defined by value) in 2020 were:
Country |
Exports in 2020 £m |
Change in % |
Exports in 2019 £m |
USA |
729 |
–31.8 |
1,069 |
France |
375 |
–13.1 |
432 |
Singapore |
247 |
–17.6 |
300 |
Taiwan |
182 |
–11.5 |
205 |
Latvia |
176 |
+23.6 |
142 |
Germany |
139 |
--24.9 |
185 |
Japan |
114 |
--22.1 |
147 |
Australia |
113 |
--3.17 |
117 |
Spain |
109 |
--40.0 |
180 |
China |
107 |
+20.4 |
89 |
The largest export destinations for Scotch Whisky (defined by volume, 70cl bottles) in 2020 were:
Country | Bottles in 2020 m | Change in % | Bottles in 2019 m |
France | 176 | +1.50 | 173 |
USA | 112 | --12.3 | 127 |
India | 95 | --27.8 | 131 |
Brazil | 45 | +5.70 | 43 |
Japan | 45 | -26.2 | 60 |
Germany | 43 | --14.3 | 50 |
Mexico | 42 | --17.9 | 51 |
Latvia | 39 | +11.9 | 35 |
Poland | 37 | +14.6 | 33 |
Spain | 36 | --26.1 | 57 |
REGIONAL DATA
In 2020, Scotch Whisky exports by
global region (defined by value) were: Region Exports in 2020 £m Change in % % of global exports European Union 1.256 bn –15.1 33 Asia and Oceania 998 –19.4 26 North America 904 –29.6 24 LatAm and Caribbean 260 –31 07 Africa 137 –22 3.6 MENA 121 –49.4 03 West Europe (non-EU) 93 +11.5 02 East Europe (non-EU) 35 –4.8 01