U.S., U.K. to lift harmful tariffs on steel, spirits

The United States and United Kingdom are ending a host of costly tariffs, effective June 1, on a number of products, including whiskey.

The deal allows historically based sustainable volumes of U.K. steel and aluminum products to enter the U.S. market without the application of Section 232 tariffs, the White House says in a news release. In addition to novel smelt and cast requirements on aluminum, the deal also requires that any U.K. steel company owned by a Chinese entity must undertake an audit of its financial records to assess influence from the Chinese government. Results of these audits must also be shared with the United States, the White House says.

The Toasts Not Tariffs Coalition hailed the move, the result of negotiations involving. U.S. Commerce Secretary Gina Raimondo and U.K. Secretary of State for International Trade Anne-Marie Trevelyan.

Since the imposition of the 25% retaliatory tariff on American whiskey in June 2018, exports to the United Kingdom — the U.S. spirits industry’s fourth-largest market — have declined by 42%, from $150 million to $88 million (2018-2021), the group says in a news release. With the removal of these tariffs on American whiskey, no more retaliatory tariffs remain on U.S., U.K., and European Union distilled spirits and wines.

The Toasts Not Tariffs Coalition consists of U.S. trade associations representing the entire three-tier chain of the U.S. beverage alcohol sector (i.e., at the producer, importer, wholesaler, and retailer levels) united in opposition to U.S., EU, and U.K. tariffs on beverage alcohol products, says the Distilled Spirits Council of the United States.

“With [the] momentous agreement with the U.K., transatlantic trade in distilled spirits will once again flow tariff-free, and American wines will no longer face the threat of debilitating retaliatory tariffs,” said the Toasts Not Tariffs Coalition.  “Cheers to Secretary Raimondo and Ambassador [Katherine] Tai and their teams at the Department of Commerce and the Office of the U.S. Trade Representative for their dedication and persistence on behalf of the entire U.S. beverage alcohol industry.”

In a statement, Scotch Whiskey Association Chief Executive Mark Kent said: “The return of tariff-free trade for whiskies following several years of significant economic pain is a welcome relief to industries on both sides of the Atlantic. The suspension of U.S. tariffs on Single Malt Scotch Whisky announced in June last year has been matched by the suspension of U.K. tariffs on Bourbon and American whiskey — a boost to the Scotch Whisky industry given the longstanding links between our industries, not least the trade in casks.”

Jon Sanders is Research editor and Senior Fellow, Regulatory Studies, at the John Locke Foundation.

Tariffs and import quotas, Sanders says, usually reduce the general welfare.

“That’s one of the very founding insights of economics, going back to Adam Smith. Tariffs are so fraught with unintended negative consequences that they tend to leave people worse off, not better. Tariffs on spirits are not unusual, either. In the 18th century, Scottish national poet Robert Burns wrote about the devastation to Scotland of tariffs to protect London gin distillers against Scottish distilleries.

“Now we are seeing retaliatory tariffs harming bourbons, whiskeys, and Scotch on both sides of the Atlantic. Not only have they harmed those industries, but their customers are worse off as well. It’s good to see these tariffs fall. Perhaps trade officials in both countries are beginning to recognize that, as Burns wrote, “Freedom and whisky gang thegither [go together].”