US trade wars loom as Scotch faces £600m hole in exports

By Jo Gilbert

Published: 03 February, 2025

A mounting global trade war between the US and its three largest trading partners has reignited concern for businesses in markets such as the UK, as the Scotch whisky industry is still recovering from a £600m hole in its finances.

On Saturday (1 February), newly inaugurated President Trump announced a new 25% tax on shipments from Mexico and Canada, and raised existing tariffs on goods from China by 10%.

With further tariff rollouts expected to hit the EU and possibly the UK, businesses are left wondering how exports such as Scotch will be impacted.

Read more: UKSA writes letter to Chancellor bemoaning gin duty rises

Harpers has learned that the last round of tariffs imposed on Scotch as part of a transatlantic aviation dispute left a significant dent in Scotch’s finances.

According to the Scoth Whisky Association (SWA), on 18 October 2019, an ad valorem import tariff of 25% was applied on all Single Malt Scotch Whisky and Scotch Whisky liqueurs entering the US. Exports of Scotch Whisky to the US fell by 25% in the last three months of 2019, and over £600m of exports were lost (equivalent to over £1m a day) over the 18 months the tariffs were levied.

The SWA was keen to stress that the previous US tariffs on Scotch Whisky, between October 2019 and March 2021, were not as a result of the trade policy of President Trump. They resulted from a long-standing dispute over large civil aircraft subsides, which has spanned multiple Republican and Democrat presidencies and resulted from a WTO judgement.

A spokesperson for the SWA said: “The industry looks forward to working in partnership with President Trump and his administration to build trade links which create jobs and investment in the US.

“We fully support the engagement the UK government has had with the US administration, highlighting the investment the Scotch Whisky industry already brings to the US economy and the value it adds to the US hospitality sector.”

Regardless of previous disputes, the US' reignited focus on waging trade wars has introduced significant instability to the global economy.

Asian markets slumped this morning, while Europe braces for targeted measures.

The US President has said the European Union could expect levies “pretty soon” and that imposing tariffs on the UK “might happen”.

The EU has “really taken advantage of us” he said, pointing to the US’s economy’s $300 billion deficit.

Making good on earlier threats, Trump’s tariffs will have a huge impact on the balance of trade between the US, Canada and Mexico, which have been tightly linked economically after decades of free trade under a treaty signed in the 1990s, known then as Nafta.

Certain alcohol categories have flourished in the US as a result, such as tequila and mezcal, which have seen consumption rates roughly triple since 2003 (Distilled Spirits Council figures).

China, Canada and Mexico have already vowed to take retaliatory measures: together, they account for 40% of the roughly $3tn goods the US imports each year.

As the tariffs risk an economic standoff, Canadian Prime Minister Justin Trudeau has said that Canadian duties on $30bn (£24bn) worth of trade in North American alcohol and fruit will take effect on Tuesday when the US tariffs go into effect. As a result, many Canadian retailers have begun to remove American alcohol brands from their shelves, as well as highlighting specifically Canadian-produced products.

According to outlets such as the BBC, US alcohol importers such as Palazzi have been fielding questions from typically small, family owned suppliers in Mexico.

If the tariffs are prolonged, the 25% tax on categories such as mezcal, tequila and rum will push up prices and sales will drop.

Scotch is also facing another significant hurdle.

In June 2026, a five-year suspension on 25% tariffs which Trump brought in during his first presidential term will automatically expire.

The tariffs previously came into effect in 2019 amid a trade dispute between the US and the EU over subsidies given to Airbus. The Scotch Whisky Association (SWA) reported a “stark” and immediate 25% drop in exports to the US for the final quarter of 2019.

If nothing is done, another significant sum in lost revenue could be awaiting Scotland’s whisky industry.

Miles Beale, chief executive of the Wine and Spirit Trade Association, concluded: “We very much hope the introduction of blanket import tariffs on goods from the from the UK into the US market can be avoided and that governments on both sides of the Atlantic can find a way forward not just in the short term but also to resolve ongoing disputes on steel/aluminium and aircraft. Ultimately tariffs hurt not only exporting businesses but consumers too.”

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