Exclusive:Scottish businesses 'will quit' US over new Donald Trump tariffs as whisky threat hits home

The American president has proposed a 20 per cent tax on goods imported into the US - something the Centre for Economics and Business Research has claimed could cost British industry £2.5 billion a year.

Taking office this week, Mr Trump’s proposals have prompted fears for Scottish businesses, with Scottish Government figures already appealing to Mr Trump's maternal roots in the Isle of Lewis, hoping for exemption or a better deal.

Speaking exclusively to The Scotsman, some of Scotland’s most prominent business groups expressed concerns over the threat of tariffs, warning the taxes would hit small businesses the most, and even kill off some exports to the US entirely.

Colin Borland, director of devolved nations at the Federation of Small Businesses (FSB), warned artisan food and drink makers, along with small distillers and craft bakers, faced an anxious wait over what trade would look like under the new Trump administration.

He said: “These are the firms likely to be hardest hit by any increase in tariffs or the introduction of other new trade barriers.

“The United States is an important market for small Scottish firms who trade internationally. Our latest FSB research shows the US is the top market for them outside the EU, with more than half (59 per cent) export to the US and nearly a third import goods.

“Many smaller Scottish exporters are selling premium products, such as whisky and luxury food items, which tend to sell at higher prices and in smaller numbers than the average. Higher tariffs are likely to force them to increase the prices they charge their customers in the US. That will almost inevitably lead to a shrinking in the market for their goods.

“The overall cost of exporting is already one of the biggest barriers facing small businesses who trade overseas or are considering doing so. For that reason, any new tariffs or non-tariff barriers are likely to hit smaller exporters the hardest.

“Most firms who export have been thinking about the impact that this could have for some time now. We have heard of some larger firms who may be attempting to frontload their deliveries, to get more goods into the United States ahead of the potential introduction of tariffs.

“That is much harder for smaller firms who don’t have the same large-scale production capacity and storage facilities of major exporters, and, of course, is almost impossible if you produce perishable goods.

“One of the risks of any new trade barriers is that small Scottish firms who have been considering exporting to the US will start to think that it is isn’t worth the bother.”

Dr Liz Cameron, chief executive of the Scottish Chambers of Commerce, described the USA as “critical” for Scotland’s economy. She said America was Scotland's top international export destination and largest inward investor.

“With its vast consumer base and strong demand for high-quality products, Scotland’s whisky, seafood, textiles, and tech solutions are well-positioned to thrive,” she said.

“However, tariff-related threats loom over Scottish exporters as we approach the start of a new President Trump administration. Unpredictable trade policies and the imposition of tariffs on specific goods will create instability for exporters. Scotland’s businesses will need government on its side to negotiate competitive trade terms and minimise tariff-related barriers."

There are deep concerns over the prospects for Scotch whisky, with single malts hit with a 25 per cent tariff under the first Trump presidency. This meant the importer of every bottle arriving at an American port was charged 25 per cent of the product’s value as a tax, which was then passed on to the American consumer. With prices soaring, demand went down, something the Scotch Whisky Association (SWA) estimates cost the industry £600 million in sales during the 18 months the tariff was in place.

For its part, the SWA is now looking closer to home, urging the UK government to reconsider its own tax on whisky to help boost the industry.

A SWA spokesperson said: “The UK government must reconsider its presumption against spirits in tax and regulation. From paying four times more per unit of alcohol than cider as part of the warped duty system to being barred from tax breaks available to other alcohol categories, the Scotch whisky industry is consistently put at a competitive disadvantage. This, in turn, makes it more difficult for the industry to argue for fair treatment in export markets.

“Next week, the tax on every bottle of Scotch whisky is set to rise to over £12 for the first time in history and many producers are being stretched to breaking point by the weight of tax and regulation. To support the industry to boost growth, create jobs and investment across the UK, the UK government should stop taxing Scotch whisky to the hilt and instead keep its promise to ‘back Scotch producers to the hilt’.”

On Monday it was revealed Sir Keir Starmer had formed a special mini-cabinet to secure a US trade deal. The SNP have echoed the calls of the SWA and urged UK ministers to make supporting Scotland's national drink a “key priority”.

Sir Keir promised before the general election that he would back Scottish producers “to the hilt” following a visit to InchDairnie whisky distillery Ian Murray, the Secretary of State for Scotland, previously accused the Tories of breaking their Wpromise to the Scottish whisky Industry” following a tax hike of 10.1 per cent last year.

SNP MP and vice-chair of the APPG on Scotch whisky, Graham Leadbitter, said: “The Labour government has our whisky industry over a barrel with a tax regime that is costing the UK £300m in lost revenues and we know when Trump was last in office, our world class whisky faced 25 per cent tariffs. This is no time for a meek Westminster government unwilling to put Scotland’s interests first and it's imperative any trade delegation makes Scotland's national drink a priority.

“SNP MPs voted against Labour's tax raid on Scotland’s national drink, but what the Labour government Budget showed was that just like our energy sector, Westminster simply sees our industries as a cash cow to bleed every penny out of. We should be backing Scottish businesses to thrive because that’s how to deliver growth and support jobs.

“With Trump tariffs looming large, it’s time Labour finally listened to the Scottish Whisky Association and stopped its discrimination against Scotland’s national drink when it supports more than 40,000 jobs and delivers more than £7.1bn to the Treasury.”

Lib Dem MP Alistair Carmichael also urged Mr Trump not to hit Scotland with tariffs.

The Orkney and Shetland MP said: “We all raised a glass to [former] president [Joe] Biden in 2021 when he dropped the Trump tariffs on Scotch whisky. Those barriers caused distillers enormous and unnecessary harm between 2019 and 2021, so it is vital that the government uses all the leverage they have to ensure that tariffs are not renewed now that Donald Trump is back in the White House. If Trump loves his Scottish roots as much as he says, then he should welcome Scotland’s flagship export.”

The First Minister has previously warned tariffs imposed by the US could be “very damaging to key sectors” of Scotland's economy. The UK business secretary on Friday said Britain should be excluded from the tariffs because the US had no goods trade deficit with the UK.