The Scotch whisky industry has welcomed news the US will not impose tariffs on the spirit for five years, following a breakthrough in talks on the Airbus-Boeing dispute.

A 25% tariff was placed on single malt Scotch whisky by the Trump administration as part of a trade dispute between the US and EU countries over aerospace subsidies.

Washington agreed to temporarily halt tariffs in March in a bid to negotiate a solution.

After talks between UK International Trade Secretary Liz Truss and US trade representative Katherine Tai, both sides have agreed to halt retaliatory tariffs for five years.

The Scotch Whisky Association (SWA) estimates more than £600 million in exports was lost due to the trade barrier.

Other UK industries including cashmere and construction vehicles were also affected by the trade dispute, which had made exporting to the US harder since October 2019.

Karen Betts, chief executive of the SWA, said: “This is very good news for Scotch whisky.

“The past two years have been extremely damaging for our industry, with the loss of over £600 million in exports to the United States caused by a 25% tariff on single malt Scotch whisky imposed as a result of the long-running dispute between US and European aircraft manufacturers.

“This deal removes the threat of tariffs being reimposed on Scotch whisky next month and enables distillers to focus on recovering exports to our largest and most valuable export market.

“Today’s agreement is a culmination of many months of intensive negotiations and we’re grateful to Liz Truss, International Trade Secretary, and Katherine Tai, US trade representative, and their teams for their hard work.

“Given, however, that this deal suspends tariffs rather than fully resolving the underlying dispute, what’s critical now is that the governments and aerospace companies on both sides stick to their commitments and work with one another constructively.

“I want to note too that American whiskies remain subject to tariffs on entry into the UK and EU as a result of a separate dispute on steel and aluminium, and we hope these tariffs can also be resolved quickly.”

As part of the deal struck between the US and UK governments, both sides agreed to form a working group on the civil aviation industry.

They have agreed that research and development practices will not harm the other, as well as agreeing to co-operate against “non-market practices of third countries”.

Ms Truss said: “This deal will support jobs across the country and is fantastic news for major employers like Scotch whisky and sectors like aerospace.

“We took the decision to de-escalate the dispute at the start of the year when we became a sovereign trading nation, which was crucial to breaking the deadlock and bringing the US to the table.

“I want to thank Katherine personally for her role in making this happen.

“Today’s deal draws a line under an incredibly damaging issue and means we can focus on taking our trading relationship with the US to the next level, including working more closely to challenge unfair practices by nations like China and using the power of free trade to build back better from the pandemic.”

The US trade representative said the agreement shows “democracies can deliver results”.

Ms Tai said: “Reaching an agreement with the United Kingdom to finally put the large civil aircraft disputes behind us is a great step forward for our special relationship.

“I want to thank Secretary Truss for her partnership while we worked to get this deal across the finish line.

“It is a model we can build on to ensure fair competition and address common challenges from China and other non-market economies.”

SNP MP David Linden welcomed the removal of tariffs but he claimed the UK Government had dragged its feet on the issue.

He said: “From the outset, Scotch whisky should never have been caught in the crossfire of this trade dispute and today’s news will see the industry in Scotland breathe a massive sigh of relief.

“Whilst this announcement is very welcome after months of cross-party campaigning, the losses to Scotch whisky exports have been eye-watering and it will take time for the industry to get back on its feet.

“That’s why further support is absolutely vital.”

Scottish Secretary Alister Jack said: “The suspension of retaliatory tariffs for five years is great news for the Scottish whisky industry – a cornerstone of Scotland’s economy.

“The UK Government has fought incredibly hard on this issue, petitioning the highest levels of the US administration to remove tariffs which were harming our Scottish exporters.

“We are very pleased to have brought an end to the trade dispute.”