The US under new president Joe Biden has agreed to suspend damaging tariffs on UK imports as part of a deal to negotiate on a longstanding dispute with Europe over aerospace subsidies and tax breaks.

The US imported £550m of UK products a year before the imposition of tariffs in 2019, making the US the biggest individual country market for UK exports. 

WTO-sanctioned tariffs

The tariffs were imposed after the World Trade Organisation ruled that US-based Boeing and EU aerospace manufacturer Airbus had both received state support that broke international rules.

The EU and US were then allowed to impose tariffs totalling $12bn on a wide range of imports, with Scotch whisky and other UK-made products such as cashmere, cheese and machinery getting hit by levies.

Four-month suspension

However the US has now agreed to a four-month suspension of these tariffs on UK imports as a resolution is sought.

It follows a move by the UK government in January to drop import levies on goods imported from the US.

‘A bold, joint step’

In a statement today, the two governments said:

"The United Kingdom and the United States are undertaking a four-month tariff suspension to ease the burden on industry and take a bold, joint step towards resolving one of the longest running disputes at the World Trade Organisation.

"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 Scotch Whisky Association has estimated that the 25% tariff on single malt Scotch whisky had caused exports to the US to fall by 35% in the 16 months it has been in place.

'Great for UK exporters'

Marco Forgione, director general of the Institute of Export & International Trade, welcomed the news.

“Scotch whisky, cashmere, cheese and machinery are important products – for Brand Britain, for employment and for the economy," Forgione said. "The suspension of US tariffs, coming hard on the heels of yesterday’s budget, is great news for UK exporters.

“It underlines the special economic relationship between the UK and the US as we both forge our new approaches to international trade.”

In February, president Biden’s new trade representative Katherine Tai promised to accelerate negotiations with the EU to resolve the commercial-aircraft subsidies dispute, citing the argument’s negative impact on several industries.

Cashmere, machinery, cheese and other products

£550m

At 1pm today, international trade minister Liz Truss tweeted: “I've agreed with the US to remove retaliatory tariffs on a range of UK goods:

• The removal of Scotch whisky tariffs of 25%
• Removal of tariffs on cashmere, machinery and other products
• A joint de-escalation of the Boeing-Airbus dispute”