By Yuka Hayashi 

WASHINGTON -- The U.S. temporarily suspended tariffs on Scotch, cheese, cashmere sweaters and other consumer imports from the U.K. on Thursday as the nations work to resolve a longstanding trade dispute over commercial-aircraft subsidies.

The decision to suspend the 25% duties was announced in a joint statement by both governments, and follows the U.K.'s decision that took effect Jan. 1 to lift duties on products including U.S. rum, brandy and vodka.

Levies on U.S. bourbon and other whiskeys remain, because they were taxed separately in response to U.S. steel and aluminum tariffs.

The mutual suspension of tariffs will be in effect for four months, and reflects a thawing of trade tensions between the two countries. President Biden has pledged to work more closely with U.S. allies, in contrast to the aggressive tactics and tariffs pursued by the Trump administration to address what it called unfair trade practices by other countries.

The tit-for-tat tariffs stem from a long-running dispute between the U.S., the European Union and the U.K. over European subsidies to Airbus SE and U.S. subsidies to Boeing Co.

The retaliatory tariffs imposed by the U.S. and the EU against each other remain in place, affecting billions of dollars in European wine and food products imported into the U.S. as well as American tobacco, nuts and other food products shipped to the EU.

In their joint statement Thursday, the U.S. and U.K. governments said the four-month suspension of the tariffs would allow them to "de-escalate the issue and create space for a negotiated settlement to the Airbus and Boeing disputes."

The big winners of the latest move are the U.K. distilleries of Scotch whisky and their U.S. importers and consumers.

Before the U.S. tariffs were implemented in 2019, the U.K. shipped nearly $500 million of single-malt Scotch to the U.S. That accounted for roughly two-thirds of the $750 million in items affected by the U.S. duties in the aircraft dispute. Other beneficiaries include pork, cheese and cashmere clothing, the U.K. government said.

"Businesses across the UK will benefit from the U.S. decision today to suspend tariffs in this dispute," British Prime Minister Boris Johnson said in a written statement. "I look forward to strengthening the UK-U.S. relationship, as we drive economic growth and build back better together."

The agreement comes as the U.S. and the U.K. continue to negotiate a new bilateral trade agreement, sought eagerly by London after its departure from the EU. Mr. Biden has said he won't sign new trade agreements soon as he gives priority to the recovery of the domestic economy.

Trade experts said the suspension of the U.K. tariffs will put pressure on U.S. and EU officials to seek an early solution to the aircraft dispute.

"It is going to force the European Union to at least reconsider its posture," said Roger Murry, a lawyer for the Coalition to Stop Restaurant Tariffs, which represents restaurants and wine importers, already struggling during the coronavirus pandemic.

Katherine Tai, who is expected to be confirmed U.S. Trade Representative in the coming days, said at her confirmation hearing last week she would be eager to settle the aircraft dispute. "I would very much be interested in figuring out how to land this particular plane because it has been going on for a very long time," she said.

The EU's trade commissioner, Vladis Dombrovskis, called for a mutual suspension of tariffs in the aircraft dispute this month.

The U.K. and EU tariffs on some American products, including whiskey, remain as their response to the U.S.'s tariffs on steel and aluminum imposed by the Trump administration.

Write to Yuka Hayashi at yuka.hayashi@wsj.com

 

(END) Dow Jones Newswires

March 04, 2021 15:22 ET (20:22 GMT)

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