Scottish Town lands on the front line of American trade dispute

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ABERLOUR, Scotland: As Washington’s commercial dispute with China cools, the United States is still skirmishing with Europe on several tariff fronts, and this Scottish city of approximately 1,000 people is caught in the crossfire.

For decades, Aberlour and its surroundings in the Scottish Highlands have exported malt whiskey, cashmere and biscuits to the US. UU. In October, the Trump administration hit all three with a 25% tariff to punish the European Union for subsidies to

Airbus SE,

The maker of the plane.

The measure was introduced with tariffs on $ 7.5 billion in European goods, including airplanes, food products, luxury goods and other sectors. Washington now threatens to increase some of those tariffs to 100% and introduce new ones in other products.

The United States is also threatening to collect taxes on French products worth $ 2.4 billion in response to a Paris digital tax, and has not ruled out the imposition of tariffs on some $ 60 billion in annual European exports of cars and auto parts.

Washington’s tariffs on European products are aimed at some of the most politically sensitive and iconic companies in the EU: national symbols such as whiskey, champagne, cheese and cashmere.

Across the region, companies are raising prices or absorbing the additional costs of tariffs while fearing an extension of tariffs and wondering why a US tariff boost they had primarily associated with China is landing at their doors.

“This has nothing to do with us, he sat in the Highlands,” he said.

John McDonough,

executive director of Speyside Distillers Co.

Speyside Cooperage in Aberlour produces and repairs barrels used by surrounding distilleries.

Photo:

Sophie Gerrard for The Wall Street Journal

The local malt whiskey producer has about $ 131,000 of the spirit in his warehouse that his American distributor no longer wants. McDonough said he is waiting to see if the tariff on individual malts extends to 100%. That decision could come at any time.

“It would be a disaster for us,” McDonough said.

This week, USA UU. He agreed to stop the fire in his two-year trade war with China, halving the $ 120 billion tariffs on Chinese products and pausing more planned tariffs.

President Trump has said that Europe is worse than China in commercial matters.

“I am very afraid that now President Trump will focus more on Europe,” he said

Matilde Poggi,

a winemaker in northern Italy who sells half of the 150,000 bottles he produces each year to the USA. UU.

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Italian wine was not collected in October, but it appeared on a December list from the office of the United States Trade Representative as a potential target for new rates related to Airbus.

Italian winemakers are already suffering. Ms. Poggi generally sells about $ 222,680 in rosé wine to the US. UU. In this age. But you still have to sell a single bottle, since US importers. UU. They fear that it may be subject to tariffs when it is sent for summer consumption, he said.

Producers in the EU sell more than $ 3.34 billion in wine each year to the US. UU., Its largest market. French winemakers already have a 25% tariff. The European Confederation of Independent Wine Growers reports that its French members exporting to the United States lost 10% of last year’s income due to the US October tariff.

Food and beverages are the largest manufacturing industry in the EU, generating revenues of $ 1.34 billion. Tariffs are making companies choose between raising prices or eating the loss to protect market share.

Aberlour’s largest food exporter is Walkers Shortbread, which produces butter cookies, cookies, crackers and crackers.

Photo:

Sophie Gerrard for The Wall Street Journal

While it is scheduled to leave the EU on January 31, the United Kingdom hosts Airbus factories that will likely keep it as a target for tariffs. The closest, however, is more than 400 miles from Aberlour.

Scotland’s largest food exporter, Walkers Shortbread Ltd., chose to increase the prices of high-end cookies in the United States, but guaranteeing the loss of sales.

“The company’s profits could almost disappear,” he said.

James walker

A managing director

Walker spent 40 years building the American business. It is the largest export market of the family business and generated around 15% of its sales last year.

Any blow to the Walkers factory, whose smell of butter and sugar reaches the city, threatens all of Aberlour.

Sean Cattanach

who runs a small general store with his wife, described a drip effect on spending at his and other local businesses if Walkers and the whiskey industry stop spending so much.

Johnstons of Elgin has been weaving fabrics for 222 years and exports cashmere clothing to the US. UU.

Photo:

Sophie Gerrard for The Wall Street Journal

Nearby, Johnstons of Elgin Ltd. has left US prices unchanged. UU. In his cashmere clothes, reducing the loss of sales. While the US UU. They represent about 10% of the company’s sales, its US market. UU. It grew 40% last year.

“You lose market share in an instant, and it takes years to recover it,” he said

Simon Cotton,

the company’s executive director, while noisy looms worked in a factory that has been weaving fabrics for 222 years.

Nearly half of Scotland’s 120 whiskey distillers are within a radius of approximately 15 miles from Aberlour, including one in the city. The industry expects the 25% tariff on single malt exports to reduce sales by 20% in the United States over the next year. If the rate increases to 100% and extends to mixed whiskeys, then the big beverage manufacturers, such as

Diageo

PLC and

Pernod Ricard SA

“Take a hit.”

Ewen Mackintosh,

The managing director of Gordon & MacPhail, a whiskey distiller and exporter, said any loss in the US market share. UU. It could be difficult to overcome even if tariffs are eliminated.

“We live in a competitive category to other whiskeys,” he said.

Locals here wonder why they are Scottish cookies, not French; Scotch whiskey, not Irish; and local cashmere, instead of Italian. They talk about Mr. Trump’s ties with Scotland; His mother was Scottish. But governments generally use tariffs to target high-profile products that will not harm domestic jobs or industry. French cheese and wine were affected by Airbus fares, as aircraft parts manufacturers were not affected because European manufacturers supply US aircraft.

Brussels itself pursued high-profile US targets, beating Bourbon and Harley-Davidson last year in retaliation against Washington’s steel tariffs.

Write to Alistair MacDonald at alistair.macdonald@wsj.com

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