DAVID STEWART: Is this the end of the special relationship between the UK and the US?
President Trump’s recent Executive Order creating a portfolio of new tariffs for countries exporting to the United States has triggered a worldwide stooshie.
In the Highlands and Islands, there was shock and dismay from whisky distillers as the implications of Trump’s tariff decision sank in.
The United States is the largest export market for whisky, at £971 million in value in 2024. Producers worry that the new tariffs could lead to significant losses, on the scale of millions of pounds. The Scotch Whisky Association (SWA) said that the previous 25 per cent tariff imposed by America between 2019-2021 resulted in over £600 million in lost export revenue.
The broader UK economy is expected to feel the impact as the 10 per cent tariff disrupts supply chains, puts up prices and dampens demand.
• Sign for our free newsletters
The main intermediatory for the Westminster government will be former Labour cabinet minister and European commissioner Lord Mandelson. The First Minister is in New York for Tartan Week, where he is expected to meet leading American industrialists. John Swinney is right to describe Scotch whisky as ‘a truly global brand’ and that it could act as a ‘passport to attract international investment in Scotland’.
Whisky producers in Scotland import around $300 million worth of used bourbon casks each year for use in distilleries across the Highlands and Islands, and beyond. By US law, bourbon distilleries can only use a barrel once for bourbon, which creates a vital export market for America. Around 95 per cent of Scottish single malts are aged in ex-bourbon barrels. Mark Kent, chief executive of SWA, said: “Scotch whisky is a quarter of all Scottish exports to the US, but it is not one-way traffic across the Atlantic, with the industry working hand in glove with US partners to grow exports and inward investment in Scotland.”
Whilst legions of economists and financial journalists debated the maths behind President Trump’s new international tariffs, US late-night host John Oliver described them as ‘trying to figure out the square footage of your house by dividing your phone number by your dog’s age’.
Whatever the assessment of Trump’s maths may be, they exist - they are the new reality and countries across the globe who export to the US are desperately attempting to re-tool their economies to avoid meltdown. The economic effects of the tariffs were immediate, with stock markets tumbling around the world. The FTSE 100 fell to a three-month low, whilst in the US, the Dow Jones suffered its worst result since 2020.
Is this the end of the special relationship between the UK and the US? Or should the UK be grateful that we ‘only’ had a 10 per cent tariff, as opposed to our neighbours in Europe? I am not comfortable with either position.
In reality, we are moving to a new environment of transactionalism instead of trust. It may be that the price tag of having no, or reduced, tariffs on UK exports is a change to our digital regulation or even UK commercial access to the NHS. Sensible observers will argue that we need to keep within the well-established rules-based system of international trade, where the UK still has status and influence.
The World Trade Organisation has its problems, but better to play by the rules than to spin off into a trade war that everyone loses - and where the victims could well include the Scotch whisky industry.
