US suspends tariffs on UK goods to resolve aircraft dispute

The United States has agreed to suspend millions of dollars worth of tariffs on exports from the United Kingdom, including Scotch whisky, as part of an effort to resolve a long-running transatlantic trade dispute over aerospace subsidies.

The US government will suspend tariffs for four months on a range of goods, the two countries said in a joint statement on Thursday, in the latest move to de-escalate trade tensions centred around aid for Boeing and Airbus.

Former US President Donald Trump’s administration had slapped tariffs in 2019 on European goods worth $7.5bn in retaliation for state support given to Airbus.

Britain was targeted along with the other three stakeholders in Airbus – Spain, France and Germany – for more tariffs than other countries.

The European Union retaliated with tariffs on up to $4bn of US goods over subsidies to Boeing, but the UK offered an olive branch to the US by announcing it would suspend tariffs from January, an offer that President Joe Biden’s administration has now moved to reciprocate.

“This will allow time to focus on negotiating a balanced settlement to the disputes, and begin seriously addressing the challenges posed by new entrants to the civil aviation market from non-market economies, such as China,” the joint statement said.

Distillers of Scotch whisky – the UK’s largest food and drink export last year – cheered the news that the 25 percent tariff would be cut to zero.

We're delighted – returning to tariff-free trade with the US is simply great news for our industry.

Thank you @trussliz @tradegovuk for your commitment to resolving this problem and for your successful work with #USTR https://t.co/v946nd4nMg

— Karen Betts (@KarenEBetts) March 4, 2021

Scotch exports to the US fell by a third since the tariffs were imposed 16 months earlier, costing the industry more than half a billion pounds ($700m), the Scotch Whisky Association said.

“Suspending these tariffs – stemming from a transatlantic trade dispute that had nothing to do with us – and a return to tariff-free trade with the US means livelihoods and communities across Scotland will be protected,” said the trade group’s CEO, Karen Betts.

Scottish cashmere producers, pig farmers, and Stilton cheesemakers will also benefit from the suspension of tariffs, the UK Department for International Trade said.