Two whiskey giants are united by Trump tariffs: Scotch, bourbon
Chris Swonger, a prominent figure in the US spirits industry, recognized the importance of being present when President Trump visited his golf course in Aberdeenshire, Scotland, this summer. He made a seemingly counterintuitive request: zero tariffs on Scotch whisky imported into the United States. American whiskey producers, primarily from Kentucky’s bourbon industry, do not view the potential for higher Scotch prices due to tariffs as a chance to gain a competitive advantage. The whiskey business has a connected, transatlantic relationship, they say, and both sides risk losing out.
“Our industry has thrived because we are so closely intertwined together,” said Mr. Swonger. The tariffs on British spirits “would be detrimental to the US economy and be detrimental to US consumers,” he stated. Recently, Mr. Trump has advocated for a revision of global trade agreements and the implementation of tariffs, which he anticipates will generate trillions of dollars in revenue and boost American employment. Some industries worry that the levies will result in job losses, as tariffs disrupt a complex web of supply chains, which economists predict will slow US economic growth. In May, Britain became the first country to announce a trade agreement with the United States, lowering tariffs on British cars and airplane parts. However, Mr. Trump maintained an extra 10 percent tariff on nearly all other imports. Efforts to revise that deal and reduce tariffs have intensified ahead of Mr. Trump’s state visit to Britain this week.
Scotch makers export 90 percent of their product annually, with the United States as their largest market. If the 10 percent tariffs continue, the United States will lose 3,300 jobs, and the US hospitality industry would face a $300 million loss. “It’ll impact distributors and retailers and bartenders and, ultimately, the consumer,” Mr. Swonger stated. His organization, along with the Kentucky Distillers’ Association, is actively lobbying American officials to adjust the deal with Britain. In late July, Mr. Swonger met with Mark Kent, at the Glen Garioch Distillery, located about 12 miles northwest of Mr. Trump’s Aberdeenshire golf resort. Holding a dram, they both advocated for the removal of the 10 percent tariff on Scotch. “We are the model for fair and reciprocal trade,” Mr. Swonger stated in an interview, highlighting one of the Trump administration’s objectives. Scottish officials are urging the government in London to advocate for a carve-out for Mr. Trump and his officials. Mr. Trump has stated that the deal is “done,” yet the whiskey industry remains hopeful that it is not completely resolved. John Swinney, Scotland’s first minister, stated there was a “window of opportunity” for a Scotch exemption following his meeting with Mr. Trump in July. He intensified his efforts last week during another meeting with Mr. Trump at the White House and presented his case to lawmakers on Capitol Hill, with support from Mr. Swonger of the American lobby group.
“We are now entering the critical days on which hopes of a better tariff deal for Scotch whisky rest,” Mr. Swinney said last week. He later informed reporters that there was a “real chance” of lowering the levies. Numerous major liquor companies operate distilleries in the United States and Scotland, including the Kentucky-based Brown-Forman. Diageo, the London spirits giant behind Bulleit bourbon and Johnnie Walker Scotch, announced that tariffs would impose a $200 million annual cost. The interconnected nature of the whiskey industry is most evident in the barrels. Bourbon must be produced in new American oak barrels. Afterward, those used barrels are shipped to Scotland to age Scotch. For American distilleries, it’s a significant trade, instead of incurring costs to destroy the barrels, they profit by selling them. Scottish producers purchase approximately $300 million in old bourbon casks annually. Anthony Wills, founder of Kilchoman Distillery on the Scottish island of Islay, known for its single-malt Scotch, is one buyer. Approximately 60 percent of the barrels he utilizes originate from Kentucky.
“The tariffs are another blow to an industry that’s already suffering a downturn,” he said. People are consuming less alcohol, partly due to economic anxiety and prevalent health warnings. “Everyone’s been affected by this, from the malting companies right the way through to glass manufacturers,” Mr. Wills stated. For nearly thirty years, tariffs on spirits have been nonexistent. In 2019, Scotch and Irish whiskeys faced a 25 percent tariff as a response to a prolonged dispute between the United States and the European Union regarding subsidies for Airbus and Boeing. Mr. Wills covered the expenses for the 16 months they were operational. This time, he is sharing the cost of the 10 percent tariffs with his importer, but will cease this arrangement by year’s end. “It’s a double whammy because the market is fragile anyway,” he said.
