Walpole Comment | US Trade Representative announces revisions to tariffs on UK luxury

Walpole was disappointed by the news of the US Trade Representative (USTR) announcement yesterday, which will see the continuation of retaliatory tariffs of 25% imposed on single-malt whisky, cashmere, wool, tailoring, and bed linen products applied from the 1st of September. However, it was positive to see that tariffs were not extended to include additional products or increased as highlighted in the review. 

The impact of the long-standing Boeing / Airbus trade dispute is negatively affecting businesses and jobs on both sides of the Atlantic, and Walpole is committed to continue working with the Department for International Trade and our European sister organisations within the ECCIA to highlight the impact on the luxury sector and need for a resolution. 

In the early hours of yesterday, the US Trade Representative (USTR) announced they are revising their retaliatory tariffs on EU and UK products as part of a World Trade Organisation dispute over subsidies to Airbus. The changes to the list include:

– The 25% tariff on sweet biscuits, including shortbread, will no longer target imports from the UK. This will now only target imports from Germany.

– The 25% tariff on all other non-aircraft related products will remain the same.

The USTR press release can be found here.

Washington had previously raised the import tariff on certain high-end goods from Europe to 25%, hitting UK and EU luxury businesses hard and in retaliation for subsidies paid to manufacture the Airbus fleet of planes.

Walpole was hoping that British and European luxury brands would cease to be caught in the crossfire of the Airbus-Boeing dispute and had presented evidence to the USTR prior to this review explaining the harm that the 25% tariffs have on the luxury goods sector, the additional harm that this inflicts on UK luxury businesses as they deal with Brexit and the impact of COVID-19, and the negative impact on American consumers’ choice and co-investment opportunities between the US and UK. This harm included the following:

– The disproportionate effects that the US EU tariffs have on UK producers and the creation of an imbalance between different markets – e.g. that U.S. retailers will turn to Italian and Chinese cashmere producers to avoid the tariffs on Scottish cashmere; and that the Scottish whisky sector is paying over 60% of the UK’s tariff burden, six times more than metals and construction, eight times as much as dairy.

– The negative consequences for UK luxury brands, which will have to scale down operations and export volumes in the US and cut jobs.

As part of the review, the US was considering whether to increase and broaden punitive tariffs on British and European luxury goods, which have been caught up in the long-running dispute.

Whilst Walpole welcomes the news that the US has decided to lift tariffs on sweet biscuits, not to extend the tariffs to include handbags, china glassware or sparkling wines, and not to impose additional tariffs on additional key UK products such as blended whiskies and gin, it is deeply concerning that the US continues to apply its retaliatory tariffs under the Airbus dispute on whisky, cashmere, wool, tailoring and bed linen products. The cost of these tariffs continues to bear heavily on businesses – particularly in Scotland – which are critical regional employers.

The Department of International Trade (DIT) advises Walpole that Liz Truss, the Secretary of State for International Trade, continues to push for the removal of all tariffs and to reach a resolution to this situation with expediency. During her visit to the US last week, Ms Truss had a series of key meetings with the United States Trade Representative Robert Lighthizer, and other key members of the US Administration and Congress to protest against tariffs on critical British industry. Walpole will continue to provide the DIT with counsel and evidence as the Secretary of State continues her conversations with the USTR.

Go here to read the Secretary of State’s statement in relation to the news.

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