The Scottish Whisky Association has welcomed the new U.K. and Indian deal. (Photo by Jeff J … More
Scotch Whisky producers were downing a wee celebratory dram last night as the U.K. and India announced a trade deal that will slash tariffs on drinks such as whisky and gin. The agreement will also see Indian tariffs cut on cosmetics and will deliver a projected $6.4 billion boost to the U.K. economy, according to the British government.
The announcement comes amid the sobering prospect for grocers and wine merchants of a tariff war hitting European alcohol sales to the U.S., which has already seen the reimposition of suspended tariffs on U.S. whisky sales into Europe, and has been met with dismay on both sides of the Atlantic.
India is actually the world’s largest whiskey market — consuming almost half of all whisky drunk globally — and under the new agreement the 150% tariff on Scotch whisky will be halved to 75%, with the potential for further reductions in coming years.
Chief of the Scotch Whisky Association, Mark Kent, said the agreement had the potential to increase exports to India by over $1.3 billion over the next five years and called it a “once in a generation” deal and “landmark moment for Scotch whisky”.
India’s market is currently dominated by cheaper blended whiskies, but with a growing middle class demand for imported whiskies like Scotch is expected to grow. Scotch whisky currently has a 2% share of the total Indian whisky market.
Scotch Whisky Tariff Boost
The deal came at an uncertain time for the European drinks industry, which is anxiously awaiting the final decision on tariffs after President Trump’s threat to impose a 200% duty on European alcohol rattled markets, sending drinks makers’ stocks tumbling. The U.S. accounts for nearly $15 billion in E.U. beverage exports, according to the International Trade Center, with wine and liquor most at risk.
And a number of Canadian grocers have also pulled U.S. drinks off their shelves.
The U.S. president first announced on his Truth Social in April that his administration could impose a 200% tariff on European wines, champagnes, and other alcoholic products unless the European Union removes a 50% tariff on American whiskey. U.S. consumers have long been major buyers of high-end European wines and spirits, but imports could become prohibitively expensive.
Among total sales, $5.9 billion came from wine, with the U.S. accounting for nearly 20% of the E.U.’s total wine exports. The spirits and liquors sector is even more exposed, with $5.8 billion in shipments to the U.S. last year — over a fifth of the continent’s total exports in this category.
France is the top wine exporter to the U.S., shipping about $2.5 billion worth last year, according to U.S. Commerce Department data. Italy was a close second, sending $2.3 billion worth of wine to the U.S. last year. For both countries, wine is among their top exports to the U.S.
European beer exports are less reliant on U.S. demand, with the E.U. shipping $1.25 billion worth of beer to the U.S. last year, around 12% of its total beer exports.
Brands like Jack Daniel’s were hoping for a European sales boost.
“The European Union has just put a nasty 50% tariff on whisky. If this tariff is not removed immediately, the U.S. will shortly place a 200% tariff on all wines, champagnes, and alcoholic products coming out of France and other E.U. represented countries,” Trump wrote on Truth Social. “This will be great for the wine and champagne businesses in the U.S.”
In 2018, the E.U. initially imposed a 25% tariff on American whiskey in a tit-for-tat response to U.S. tariffs on European metals, leading to a sharp fall in U.S. whiskey exports to Europe. While these tariffs were suspended in 2021, amid new broad U.S. duties, the E.U. reinstated and doubled its tariff on American whiskey to 50%, effective April 1, 2025.
Scotch Whisky Leads Recovery
While European stocks took a hit initially, before recovering amid a tariff pause, American distillers gained. Brown-Forman, the maker of Jack Daniel’s, has seen its stock price rise around 5% over the past month, reflecting expectations that Trump’s pressure could lead to the removal of E.U. tariffs on American whiskey and reopen European markets to U.S. producers.
“The E.U.’s decision to spike tariffs on American whiskey was described as “deeply disappointing and will likely severely undercut the successful efforts to rebuild U.S. spirits exports in E.U. countries,” Chris Swonger, CEO of the Distilled Spirits Council of the United States (DISCUS), responded in a statement.
Sales of American whiskey peaked up nearly 20%, boosted by pandemic consumption to over $5 billion according to the council’s economic data. However, liquor sales have softened as people reduced their drinking amid the rising living costs and Brown-Forman laid off around 700 staff in January.
“Reimposing these debilitating tariffs at a time when the spirits industry continues to face a slowdown in U.S. marketplace will further curtail growth and negatively impact distillers and farmers in states across the country,” Swonger added.
While yesterday’s news was welcome for Scotch whisky, Europe is a growing market for U.S. whiskey, with exports soaring by 60% over the last three years to $699 million after tariffs were suspended.
