A Tariff Carveout for Scotch? Yes, Please

Let’s raise a glass to the possibility that Trump and Starmer reach a deal allowing Americans to buy Scotch and Brits to buy bourbon without the government elbowing in to take a fat cut.

Britain and the United States will soon meet to seek progress on a trade agreement that the two nations negotiated last month. While the general 10% U.S. tariff on most other U.K. goods remains in place, the agreement aimed to reduce duties on British-made steel, aluminum, and cars.

One tariff, however, was left untouched: Scotch.

Scotch is big business in the U.K., accounting for some 7 billion pounds in domestic sales and exports (roughly $9 billion), and this is not the first time the drink has been slapped with tariffs.

In October 2019, a 25% ad valorem import tariff was imposed on Scotch entering the U.S. The tax prompted a 30% drop in exports to the U.S., which cost U.K. whiskey producers an estimated $800 million before it was suspended in 2021. (A year later, the U.K. lifted its own 25% tariff on U.S. bourbon.)

Keir Starmer, the prime minister of the United Kingdom, is expected to ask the Trump administration to eliminate tariffs on Scotch in the trade talks. This is welcome news, and not just for British distilleries.

I started drinking single malt Scotch about 10 years ago. My go-to is the 12-year Balvenie, which has perfect balance and hints of vanilla and sherry. When I started drinking Balvenie, I could buy a 750 ml bottle for $37. I stopped when the price neared $70 a few years ago. I simply couldn’t justify paying that much when I could get a perfectly good bourbon, Maker’s Mark or, say, Knob Creek, for about half that.

Now, tariffs are not the only reason Balvenie is more expensive. Prices change constantly, and for a variety of reasons. But the 25% tariff certainly played a significant role, evidenced by the fact that the price of Balvenie is considerably lower today than it was before the tariff was suspended.

In fact, the price is good enough that I might consider going back to Balvenie if these new tariffs don’t kick in. That’s a big if, however.

While a U.S. trade court recently blocked President Donald Trump’s “Liberation Day” tariffs, a federal appeals court has already temporarily reinstated them. More importantly, the Scotch Whiskey Association points out that the 25% tariff on Scotch will automatically be reinstated in June 2026 absent a deal.

It’s important to understand that such a deal would benefit virtually no one outside of the respective governments, who would see their coffers swell as a result of these new taxes.

Americans would be left paying more for Scotch. Brits would be left paying more for bourbon. Meanwhile, the “protection” enjoyed by bourbon and Scotch distilleries would be offset by their diminished exports.

The Scotch scenario is a clear example of how protectionist governments benefit themselves at the expense of consumers, one reason protectionism has historically proven so harmful.

In The Wealth of Nations, Adam Smith argued that economic policy should serve the consumers, not protect producers at their expense. He saw tariffs and other trade restrictions as akin to the government telling individuals how to spend their capital, which leads to a misallocation of scarce resources.

Later thinkers would elaborate on Smith’s work. Richard Cobden, a 19th-century English lawmaker, saw firsthand how protectionist policies harmed consumers. The British Corn Laws of the 1800s protected the landed British gentry from external agricultural producers by putting tariffs on imported grain. The laws kept food prices high, which benefited landowners but hurt the working class.

Cobden, through the Anti-Corn Law League, argued that free trade would lower food costs and improve living standards. He was proven right after the laws were repealed in 1846 and food prices fell, benefitting the bottom 90% of Brits. The Corn Laws are a good reminder that the primary victims of protectionist policies are consumers, which brings me back to the whiskey wars.

Paying an extra $15 on a bottle of Scotch isn’t going to kill me. But the normalization of protectionist policy is a serious matter. It doesn’t just result in higher consumer prices. It’s an invitation to political cronyism.

When governments use tariffs to shape markets, they’re not just adjusting prices. They’re tilting the playing field. This gives politicians the power to pick winners and losers, which is why lawmakers love tariffs. Unfortunately, society loses out, as entrepreneurs focus more on pleasing politicians than serving consumers and innovating.

I’m drinking less these days, so the possibility of new tariffs on bourbon and Scotch isn’t going to keep me up at night. But I can’t say the same about the resurgence of protectionism, which stands to hurt the poor while benefiting D.C. powerbrokers.

So for this reason and more, let’s raise an overpriced glass to the possibility that Trump and Starmer reach a deal allowing Americans to buy Scotch and Brits to buy bourbon without the government elbowing in to take a fat cut.

This article first appeared in the Washington Examiner.