The U.K. government and the outgoing Trump administration are currently in negotiations to secure a ‘mini’ trade deal, according to a story reported in the BBC. Part of the agreement may include lowering and maybe even removing the current 25% tariff on single malt Scotch whisky that was set by the U.S. over a year ago as part of a wider trade war between the U.S. and European Union.
This wider trade war originally began over a WTO lawsuit involving Airbus and Boeing, which then spiralled into tariffs on aluminium and steel, and from there has now involved $4 billion worth of U.S. exports to the E.U., and $7.5 billion worth of E.U. exports to the U.S., including Scotch whisky amongst many other industries.
In an interview with the BBC, U.S. Trade Representative Robert Lighthizer said that discussions were ongoing: “I’m talking to [International Trade Secretary] Liz Truss, about trying to work out some kind of a deal… I’m hopeful we can get some kind of an agreement out you know, we don’t have a lot of time left.“
These negotiations are taking place following the U.K.’s unilateral decision last week to suspend all retaliatory tariffs on January 1st set on U.S. goods, following the end of the Brexit transition period between the U.K. and E.U. The move was welcomed by the whisky industry on both sides of the Atlantic, with both the Scotch Whisky Association and the Distilled Spirits Council of the United States seeing it as a step forward in eventually ending the tariffs on all sides.
The rush to complete this ‘mini-deal’ is likely part of the U.K. government’s strategy to encourage an eventual much larger trade agreement following its exit from the European Union. U.S. tariffs have led to a 30% drop of Scotch whisky sales in the U.S., representing around $250 million of lost business, and ending them would be a victory for the Conservative government, which is reviled in Scotland (support for Scottish independence from the U.K. is also the highest it’s ever been),
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Lighthizer seemed confident in his BBC interview that a deal will be struck soon in any case:
“That’ll be sorted out here probably in the next two or three weeks or so… one way or another. And then I think there’s no reason why the US and the UK can’t get to a deal fairly expeditiously after that“.