Why UK-India trade deal won't save whisky and car industries from Trump's tariffs

Yahoo

07-05-2025

Sir Keir Starmer has hailed as a 'landmark' an agreement to strike Britain's biggest post-Brexit trade deal with India.
Ministers say the move which will see tariffs reduced on UK whisky, gin, cars and cosmetics, will boost trade by £25.5bn and add £4.8bn a year to the UK economy, as well as boosting wages by £2.2bn annually.
It comes as the prime minister hopes to secure a trade deal with the US, in a bid to offset some of Donald Trump's tariffs, which have triggered global economic chaos.
What will it mean for the whisky industry?
India is the biggest consumer of whisky worldwide by volume and UK sales to the country were worth more than £200 million a year in 2022. Under the new deal, tariffs on whiskies will initially be cut from 150 per cent to 75 per cent. But after ten years they are due to fall again to 40 per cent.
India is already among the largest export markets for Chivas Brothers', which includes brands such as Chivas Regal and Glenlivet, while Diageo, whose brands include Johnnie Walker, already has 50 manufacturing facilities across India.
The UK has struck a trade deal with India (Alamy/PA)
How has the whisky industry responded?
Very well.
Jean-Etienne Gourgues, the chairman and CEO of Chivas Brothers has called the agreement a 'welcome boost' for his company 'during an uncertain global economic environment'. He also said that greater access to the Indian market would be a 'game changer for the export of our Scotch whisky brands, such as Chivas Regal and Ballantine's'.
The deal will support investment and jobs in our distilleries and bottling plants in Scotland, he added.
Diageo chief executive Debra Crew described the deal as a 'huge achievement' and said it would be 'transformational for Scotch and Scotland, while powering jobs and investment in both India and the UK'.
What does it mean for the car industry?
British high-end cars will see their tariffs fall by a whopping 90 per cent under the plans. The added tax placed on them as they enter the country will plummet from more than 100 per cent to just 10 per cent under a quota.
Under the plans, the reform will start with cars with internal combustion engines but then move to electric and hybrid vehicles, 'to reflect how manufacturing in the UK is evolving'.
Will the deal undercut British workers?
Ministers have denied the agreement undercuts British workers, after opposition politicians criticised part of the deal that exempts some temporary Indian workers from national insurance payments for three years.
On Wednesday, Jonathan Reynolds described the claim as 'completely false', telling the BBC: 'There is no situation where I would ever tolerate British workers being undercut through any trade agreement we would sign. That is not part of the deal.'
The move is under what is known as the 'double contribution convention', which is designed to stop workers and employers paying twice, once in each country. It is also reciprocal, meaning any UK workers who work temporarily in India would pay no further taxes there and there are similiar agreements in place with other countries.
Will it offset the impact of Trump's tariffs?
In a word – no.
The US remains the largest key market for whisky by value, at an estimated £971 milliona year. Sir Keir Starmer hopes to secure a trade deal with the US soon - with officials suggesting it could happen this week - which would lessen the impact of Trump's tariffs, following weeks of talks.
This deal could include quotas that would exempt a certain number of UK exports from the full impact of 25 per cent tariffs on the British car and steel industry.
But no matter the carve out for individual UK sectors or Britain in general, the UK will still be forced to weather the havoc the US tariffs wreak on the global economy.