President Trump’s second term could have significant impacts on Scotland, especially in the areas of trade and tariffs. His previous use of tariffs, particularly on Scotch whisky, has raised concerns about the potential for more economic pressure as his administration moves forward.
Trade Wars Loom as Trump Resumes Tariffs
During his first term, President Trump used tariffs as a tool to challenge countries he believed were undermining American industries. China, for example, faced hefty penalties on steel and aluminum. Trump’s efforts weren’t limited to China, however; his trade policies also targeted the European Union, including the UK, and industries such as Scotch whisky.
A 25% tariff on single malts during Trump’s presidency resulted in substantial losses for the Scotch whisky industry. The Scotch Whisky Association estimated a £600m drop in sales due to the tariff, which was eventually paused by President Biden. However, this temporary relief expires in 2026, leaving the industry vulnerable once again if tariffs are reinstated.
Impact on Scotch Whisky
- The tariff hike on Scotch whisky increased the price of a $40 bottle to $50.
- A drop in demand followed, harming both producers and importers.
- With the expiration of the tariff suspension, the industry is bracing for future challenges.
For Scotland, the timing couldn’t be worse. The end of the tariff suspension in 2026 could mark the return of heightened economic tensions, especially with Trump’s rhetoric surrounding tariffs. Though no formal proposals have emerged yet, the possibility of tariffs on Scottish exports—like whisky, salmon, and textiles—remains a real concern.
Trump’s Protectionist Agenda and Its Effects on the Global Economy
Trump’s protectionist stance during his first term was aimed at bolstering domestic industries by imposing tariffs on imports. While this approach was popular among his political base, it had unintended consequences. Higher costs for American consumers were a direct result of these tariffs. As tariffs on goods like Chinese steel forced manufacturers to buy more expensive alternatives, prices for everyday products soared.
In addition, retaliatory tariffs from other countries often led to a decrease in demand for U.S. exports, creating a cycle of rising costs and inflation. While Trump’s policies focused on protecting American jobs, the long-term effects have raised questions about whether this strategy can truly benefit the broader economy.
It’s worth noting that tariffs, particularly in the case of the Smoot-Hawley Act of 1930, contributed to the Great Depression. These historical lessons may influence Trump’s approach, but the direction of his trade policy remains clear: he is committed to using tariffs as a bargaining chip to secure deals for the U.S.
Potential Impact on Scottish Exports
Scotland’s economy heavily relies on exports, including whisky, salmon, and textiles. The U.S. is a major market for these goods, and any increase in tariffs could spell trouble for Scottish businesses.
- U.S. tariffs on Scottish goods could hit industries hard.
- The Scotch whisky industry could face new challenges if tariffs return post-2026.
- Scottish companies that manufacture goods for the U.S. market could see increased costs.
In addition to tariffs, Trump’s broader trade policies could leave the UK, post-Brexit, exposed to more economic pressure. With the UK’s ability to negotiate its own trade agreements, Scotland could find itself in a delicate position as Trump continues to pursue a transactional approach to international relations.
Trump’s Oil and Gas Agenda: What It Means for Scotland
One of the key focuses of Trump’s second term is energy policy, particularly his push for increased oil and gas production. While this may benefit certain sectors of the American economy, it could have mixed effects on Scotland, particularly in terms of its oil and gas industry.
A boost in U.S. oil and gas production could lead to a drop in global energy prices, which would undermine the case for new investments in Scotland’s oil and gas sector. As governments around the world, including in Scotland, prioritize renewable energy, the expansion of fossil fuel production in the U.S. could make it harder for Scotland to attract investment.
However, there could be an upside for Scotland’s expertise in the energy sector. As the U.S. ramps up its oil and gas extraction efforts, Scottish companies that supply services to the energy industry could stand to gain from the increased demand for infrastructure and expertise.
Energy Industry Shifts
- Lower energy prices from increased U.S. production could affect Scotland’s oil and gas sector.
- Scotland could benefit from increased demand for energy expertise as the U.S. expands drilling efforts.
For many, the prospect of more oil and gas production raises environmental concerns. The U.S.’s renewed focus on hydrocarbons could be seen as a step backward in the global fight against climate change, a sentiment shared by many in Scotland, where renewable energy investments are seen as the future.
