The global drinks industry is particularly susceptible to international trade policies, and Donald Trump is looking to actively leverage tariffs on behalf of the United States. As an example, his previous administration back in October 2019, levied a 25% tariff on Scotch Whisky imports into the United States, which was part of a broader US$7.5 billion tariff package on European goods amid a dispute over aircraft subsidies. The EU retaliated with tariffs on American whiskey, causing US distillers to also experience a slump in exports.
The threat of renewed tariffs under Trump’s new administration is real and likely to cause shocks at home and abroad.
There is now more than ever, a need for strong diplomatic efforts to mitigate the potential economic impact on drinks producers, such as those of whisky in the UK, but also to look for new opportunities to support growth.
Breaking down barriers and lowering tariffs in other key markets will drive higher exports which will also result in higher production – there would be a significant impact into our drinks supply chain across the UK, growing jobs and investment.
One such example is the UK-India Trade talks, which for Scotch whisky could result in tariffs being lowered from the current 150% to 100%, making the product more accessible to consumers in India – the number 1 market for Scotch whisky exports in 2024. A trade deal has the potential to increase Scotch Whisky exports to the country by £1bn over the next 5 years according to the Scotch Whisky Association (SWA).
Reducing the 150% tariff on Scotch Whisky would make it more affordable in India, while still remaining a high-end, premium product. If the tariff were liberalised, Scotch Whisky’s market share could treble to 6%, giving greater access to Scotch Whisky products for Indian consumers but still allowing Indian whiskies and other spirits to retain the dominant share of the market.
Despite these discussions between the UK and India over the last few years, Donald Trump has already managed to deliver a quick result for US distillers since his 2nd inauguration with the announcement in February 2025 that India would be reducing the tariffs on Bourbon/ American whiskey from 150% to 100%. This new development follows India’s Prime Minister Narendra Modi bilateral meeting with US President Donald Trump and his criticism of unfair trade tariffs in the market.
Bourbon whiskey now faces the basic customs duty set at 50%, with an additional 50% levy, totalling 100%. This reduction only applies to bourbon, with no changes to tariffs on other alcoholic drinks products, such as Scotch whisky, which continues to be taxed at 150% – a clear advantage for Bourbon whiskey against other imported spirits products.
In 2024, India was the 23rd largest export market for American whiskeys. American whiskey exports to India totalled US$8.8 million. Despite being the world’s largest whiskey market by volume, American whiskey exports to India were less than what was exported to Singapore, New Zealand and the United Arab Emirates.
“This significant accomplishment opens opportunities for U.S. distillers to increase their exports to the world’s largest whiskey market and bolster American manufacturing jobs. India’s 150% tariff on Bourbon imports has severely restricted access to the Indian market for U.S. spirits exporters for far too long. We thank President Trump and Prime Minister Modi for their collaboration. Let’s make American whiskey great in India.” Chris Swonger, President and CEO of the Distilled Spirits Council of the United States (DISCUS)
According to Pratik Jain, a partner at PwC India. “It signals that the Indian government is willing to explore changes in tariff items for strategic partner countries,”
As geopolitics continues to influence the drinks world, China has also recently announced its removal of the provisional 5% tariff on brandy and whisky, meaning both categories will now be subject to the 10% most favoured nation (MFN) tariff rate, as reported by The Drinks Business. For whisky and brandy, the total tax burden on these spirits will rise from 48.31% + 0.912 RMB per litre to 55.38% + 0.912 RMB per litre.
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