Scottish Whisky Makers Fear Return Of Trump Tariffs

At the end of a wild peninsula battered by winds in west Scotland is a zero-carbon whisky distillery that's bracing for the possible return of US tariffs.

President Donald Trump has launched trade wars with Canada, China and Mexico and has Europe in his sights -- spooking Scotland's export-focused whisky industry.

The US remains the primary export market for Scotch whisky, accounting for GBP1 billion ($1.2 billion) per year.

Geopolitical trade tensions feel far away from the small Nc'nean distillery, tucked away in Drimnin on the sparsely populated Morvern peninsula, western Scotland.

But taxes threaten to undermine the young brand's efforts to generate a third of its revenue stateside.

Scotland's whisky industry is well-acquainted with the toll of tariffs, having suffered a GBP600 million hit during Trump's first term.

Nc'nean launched in the key US market a year and a half ago, expanding into 28 states, after then president Joe Biden's administration revoked the levies.

"You don't just enter the US, and suddenly you're everywhere. You have to go state by state," said Nc'nean founder Annabel Thomas, referencing the time and effort that goes into building up a presence in the world's biggest economy.

To set itself apart from Scotland's 150 distilleries, the brand said it produces the country's only certified zero-carbon organic whisky.

It uses recycled water to cool machines and sells its whisky in recycled glass bottles. It replants the wood used to power its biomass furnace and takes the residues to use as fertiliser.

That's all part of Thomas's aim for Nc'nean to court a new type of customer and break free from old-fashioned stereotypes that saw whisky become associated with cigar-smoking male clients.

Differentiation is key for the US market, Thomas explained, as she stood among her 4,500 second-hand oak barrels bought mostly from American bourbon producers.

Having a female founder at the helm is also a plus for consumers, she said, adding that the United States has "a much bigger focus on diversity".

However, on the subject of tariffs, "it's not good news", she said.

Tariffs that match those imposed in 2019, at 25 percent, would be "very significant", Thomas added.

"However, if it's only 10 percent, that's much more manageable."

She said that the company would reduce its margins, in the hopes that tariffs would be temporary.

Otherwise, her 21-person company, not yet profitable, which barrels the equivalent of 300,000 bottles each year, would turn to focus more on Asia.

Few spirits companies are talking aloud about the unpredictable US president's policies.

Diageo, producer of Johnnie Walker whisky, scrapped on Tuesday a key sales target over Trump's tariff plans, but other giants Pernod-Ricard and William Grant have remained silent on the subject.

The industry's lobby, the Scottish Whisky Association, has expressed only delight at the prospect of working with the US president.

British finance minister Rachel Reeves said she'll make the case to Trump that Scotch whisky should be spared from tariffs.

"Trump is very proud of his Scottish roots and Scotch whisky is obviously a really important part of the Scottish economy," Reeves told AFP in an interview at the recent World Economic Forum.

William Wemyss, owner of Kingsbarns distillery, said whisky found itself as "collateral damage" during Trump's first term in a trade dispute between Washington and Brussels.

But "this time... the UK is no longer part of the EU", he pointed out.

Trump on Sunday said he believed the trade situation with the UK "can be worked out", adding that he's been "getting along very well" with Prime Minister Keir Starmer.

For now, that provides a glimmer of optimism.