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FAQ: Tariffs

FAQ: Tariffs
Learn more about tariffs and how they affect international trade for Scotch Whisky producers.

What is a tariff?

Tariffs are an additional tax on Scotch Whisky or other products, charged on the import of goods in overseas markets.

Historically, tariffs have been used to protect domestic industries from foreign competition, and as a source of revenue for governments.

Tariffs are also used   to create leverage in international trade disputes. For example, by imposing tariffs on Scotch Whisky, as the United States did in October 2019, governments can  put pressure on other governments to negotiate a settlement and re-balance trade flows after they win a trade dispute at the World Trade Organisation (WTO).

So, when you read about how tariffs work, think tax.

Who pays tariffs?

Tariffs are collected by the national customs authority of the country into which the goods are being brought.

Who pays the tariff depends on the exporter’s contract with their distributors – and costs are often passed on to consumers.

The increased costs that tariffs cause can lead to a loss or reduction in exports and a loss of market share. This is because products paying tariffs can become more expensive compared to similar products in the same market. Since the tariffs on Scotch Whisky were implemented in October 2019, the value of exports of Scotch Whisky to the United States have fallen by 30%.

How are tariffs charged?

Tariffs are often set as a percentage of the value of the goods in question. For instance, the current US tariff on Single Malt Scotch Whisky is 25% – so if a bottle of Scotch Whisky that’s imported to the United States is worth $50, the tariff will be $12.50.

Are there any restrictions on setting tariffs?

The ability of governments to set tariffs is restricted by international commitments. Most major trading nations are members of the WTO and are subject to the obligations in its General Agreement on Tariffs and Trade.  This sets a limit for the tariffs they can apply and the same tariff has to be applied to the same product, no matter where it comes from.  This limit can only be exceeded in certain cases, such as under a WTO dispute. 

The Scotch Whisky industry faces various tariffs around the world, including a 150% tariff on Scotch in India, to a 5% tariff in China. The SWA works to reduce tariffs, and other non-tariff barriers to trade, around the world. Learn more about that here.

FAQ: Tariffs news & commentary

12 August 2020

SWA reaction to USTR tariff notification: Tariff remains at 25%

The SWA's Chief Executive Karen Betts comments on the latest USTR tariff notification in response to the Airbus/Boeing dispute.

28 July 2020

Industry Calls for U.S. and EU to End Trade Dispute Urgently to Save Jobs

17 associations representing beverage alcohol sectors have submitted comments in opposition to the U.S. government’s proposal to impose tariffs on distilled spirits, wine and beer from the EU and UK.

24 June 2020

US Tariffs: SWA comment on latest USTR announcement

Read the latest comment from the SWA on the USTR's recent announcement on the possibility of new tariffs on spirits products.

07 May 2020

SWA Calls for Tariff Elimination as US-UK Free Trade Talks Begin

The SWA has welcomed the formal trade negotiations that have begun this week between the UK and the US governments, and calls for removal of all tariffs on whiskies.

14 February 2020

SWA reaction to USTR tariff notification

The SWA's Chief Executive Karen Betts comments on the latest USTR tariff notification in response to the Airbus/Boeing dispute.

11 February 2020

Scotch Whisky exports surge amidst backdrop of tariff uncertainty

Scotch Whisky exports grew by 4.4% to more than £4.9bn in 2019, with 1.3bn bottles exported to 180 markets.

18 October 2019

SWA calls for end to damaging trade war as 25% tariff to US comes into force

The SWA is calling for support from the UK government following the imposition of a 25% tariff on US imports of Single Malt Scotch Whisky and Liqueurs.

03 October 2019

SWA statement on US Tariffs for Scotch Whisky

The SWA responds to US import tariffs on Scotch Whisky.