Britain will suspend European tariffs on American products — from tractors and tobacco to fruit juice and fish — in an attempt to persuade the White House to shelve steep duties on whisky.
Liz Truss, the trade secretary, hailed the UK’s standing as an “independent trading nation” last night as she revealed plans to break away from the European Union’s move to impose levies worth billions of dollars on the United States.
Ms Truss claimed that the post-Brexit move would demonstrate that Whitehall was serious about ending the world’s largest corporate trade dispute — between the aviation giants Airbus and Boeing — which has ensnared Washington and Brussels for almost two decades.
Last year the World Trade Organisation (WTO) permitted the US to impose tariffs on EU goods worth up to $7.5 billion after the bloc was found to have illegally subsidised Airbus. The Trump administration targeted a vast catalogue including French cheese, Spanish wine and Scottish single malt.
After the WTO approved retaliatory duties on goods worth $4 billion over illegal US support for Boeing, the EU hit American exports including aircraft, construction equipment and farm produce.
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The UK will stop collecting these tariffs from January 1, however, in its first major decision on trade after Brexit.
“As an independent trading nation once again, we finally have the ability to shape these tariffs to our interests and our economy, and to stand up for UK business,” Ms Truss said.
“Ultimately, we want to de-escalate the conflict and come to a negotiated settlement so we can deepen our trading relationship with the US and draw a line under all this.”
Britain will maintain tariffs imposed by the EU after President Trump put duties on foreign steel and aluminium, however. These cover popular American products including bourbon, motorcycles and jeans.
Ms Truss said: “We are protecting our steel industry against illegal and unfair tariffs — and will continue to do so — but are also showing the US we are serious about ending a dispute that benefits neither country.”
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In recent months Downing Street has tried to preserve relations with Mr Trump’s officials while courting the incoming Biden administration. It began formal talks on a prized transatlantic free-trade agreement this year.
A source said that the government was “showing the US a bit of leg” and looking for a “real win” for exporters such as distillers and Savile Row tailors.
The Department for International Trade said that it “reserves the right” to impose tariffs on the US “at any point” should negotiations fail to lead to a settlement ending the Airbus-Boeing dispute.
Scotch industry leaders have warned that a 25 per cent tariff on their single malt exports has driven distilleries to the brink over the past year. “Our businesses cannot sustain losses at this level indefinitely,” dozens of producers wrote in The Times in October. Their calls for a swift reprieve have so far fallen on deaf ears.
Scotch whisky is the world’s most internationally traded spirit, with annual exports of £5 billion across some 180 markets. American tariffs have put severe pressure on its most lucrative overseas market, however. The industry typically enjoys sales of more than £1 billion a year in the US but exports have tumbled since the duty was introduced last autumn. Sales to the US slumped by 65 per cent in May.
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Karen Betts, of the Scotch Whisky Association, welcomed a “very encouraging step”.
“We hope that this marks the beginning of the end of trade tensions with the US,” she said. “It shows the UK government’s determination to de-escalate the damaging transatlantic trade disputes that have seen Scotch whisky exports to the US fall by over 30 per cent in the past year.
“We now call on the US government to reciprocate by suspending the tariffs on UK goods stemming from the Airbus/Boeing dispute, so that industries in the UK and the US affected by this dispute can once again trade freely. The US government’s removal of Airbus retaliation on Scotch could, in turn, justify the UK removing tariffs on US whiskey under the steel and aluminium dispute.”
Andy Burwell, director of international trade at the Confederation of British Industry, welcomed the “initial step”, which he said must lead to a negotiated settlement as soon as possible. “We urge the US, European Commission and the UK to come to a swift resolution,” he said.
The government will begin a consultation to ensure that duties after Brexit “are shaped to UK interests and tailored to the UK economy”. The scope and timing have yet to be confirmed.