UK-US steel and aluminium Trade Agreement brings cheer to US whiskey producers

UK-US steel and aluminium Trade Agreement brings cheer to US whiskey producers

US and UK announced their long-awaited agreement on steel and aluminium tariffs, which has seen US whiskey producers subject to punitive tariffs on American Whiskies. The deal will come into effect on June 1, 2022, establishing the return of duty-free trade in spirits across the Atlantic.

The United Kingdom government imposed a 25 per cent retaliatory distilled spirits tariff over former United States President Donald Trump's imposition of a 25 per cent tariff on aluminium and steel products from countries, including the United Kingdom. The introduction of the tariff under Section 232 of the Trade Expansion Act of 1962, which seeks to protect national security, was part of a wider debate involving reducing imports from China and a long-running trade dispute between Boeing and Airbus.

US Whiskey producers welcome the new agreement

Since the imposition of the retaliatory tariff on American Whiskeys, exports to the UK have declined by 42 per cent. The fourth-largest market, sales from the UK, fell from $150 million to $88 million from 2018 to 2021.

The resurgence of the American whiskey market was dealt a severe blow by the trade war, which saw overall US whiskey sales (including Bourbon and Rye) drop by over $70 million per year between 2018 and 2021. The lifting of tariffs by the EU in late 2021 brought some relief to the US whiskey sector and grain farmers who have been severely affected by tariffs and trade disputes throughout the Trump presidency.

"After three very difficult years of sagging American whiskey exports, the EU and the US are back to a zero-for-zero tariff agreement on distilled spirits, which has been instrumental to our export success and job creation on both sides of the Atlantic." Chris Swonger, president and CEO of the Distilled Spirits Council of the United States

Raising a glass to tariff-free trade

The news comes with some concerns over lost investment in new distilleries, mothballed to save money and the ability to recruit a skilled workforce, including barrel makers capable of getting the whiskey production back up to pre-tariff levels.

But with nearly 10.5 million barrels of bourbon currently being aged in Kentucky alone, there won't be any shortage in the near future for a growing fanbase of American Whiskey lovers. With US tariffs on Scotch Whisky removed earlier in 2021, the flow of spirits between the US and the UK will once again reach the levels seen before the trade wars.

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