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A no-deal Brexit will be calamitous for the whisky industry

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After almost two decades of everything flowing Scotch whisky’s way, two big nasty clouds are about to darken the horizon—Brexit and the Trump-imposed 25% tariff on single malt exports to the US.

True, Brexit has long been on the horizon but could soon be upon us if the Tories’ mad gallop to the EU exit succeeds, despite a swathe of recent setbacks to their plans.

The other cloud has come out of the blue, and follows the World Trade Organisation backing a US complaint over allegedly illegal EU subsidies to Airbus. Interestingly, the EU has an ongoing counter-suit against the US alleging illegal subsidies to Boeing.

The 25% tariff on Scotch started yesterday (October 18), so Scots suppliers and US importers had scant time to hurry shipments before the bell. A senior industry figure told me about a third of US-bound whisky exports are malts, so a 25% tariff hike could badly dent sales. Even bourbon producers are unhappy as they fear EU tit-for-tat tariff hikes just when bourbon sales there are growing.

Scotch is not the only EU export hit by Trump’s new tariffs. Many continental foods are also targeted —but not whiskies from the Irish Republic, as Ireland isn’t part of the four-nation Airbus consortium. Trump, for all his cack-handedness, knows the political clout the Irish diaspora wields in US politics.

If the Trump tariff is bad news, a No-Deal Brexit will be a disaster. Scotch annually earns £4 to £5 billion in exports, much of it going to the EU or to countries which have trade deals with the EU.

All these would shrink overnight after October 31 and, for all the Get Ready for Brexit ads, it will take years to re-establish current patterns of trade and Scotch will meanwhile face higher tariffs and stricter product checks. These won’t be bumps in the road, but a collapse of the trade highway. New trade deals will take decades to finalise and Britain has a dearth of trade negotiators.

Ironically, EU-bound whisky exports are booming—but they are all trying to beat the October 31 deadline.

We can still hope a No-Deal Brexit won’t happen but, if it does, the effects on the whisky industry (indeed all industries) will be calamitous.

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