Tariffs Put Bourbon Under Fire In Looming Trade War
The American whiskey industry finds itself increasingly caught in the crossfire of international trade disputes, with the threat of retaliatory tariffs and trade actions posing significant challenges to distillers nationwide. The situation is particularly acute in Kentucky, the heart of bourbon production, where industry leaders and political figures are voicing concerns over the economic impact of these trade tensions.
What Is A Tariff?
A tariff is a government-imposed tax on goods brought into a country, IE: charging extra on cars shipped from overseas. The added cost makes imported products more expensive, which is one way to protect domestic industries and products. Since returning to office in January 2020, President Donald Trump has used the threat of tariffs as a means to an end to achieve policy goals. His targets include not just perceived rivals, such as China, but also longtime allies, like Canada, Mexico, and the European Union.
The Looming Trade War
On February 2, President Trump signed an executive order imposing a 25% tariff on imports from Canada and Mexico, as well as a 10% tariff on imports from China. According to the White House, the aim was “to combat the extraordinary threat to U.S. national security, including our public health posed by unchecked drug trafficking,” The measures against Mexico and Canada were put on hold days later, but the episode fostered resentment north of the border.
The dispute has led to a significant disruption of American whiskey sales within the Canadian province of Ontario, home to Toronto, its most populous city. Following Trump’s actions, the province directed the Liquor Control Board of Ontario (LCBO) to remove American spirits from its shelves, singling out Kentucky bourbon. “We’re going after their bourbon,” said Ontario Premier Doug Ford, according to Louisville, Kentucky, NBC-affiliate WAVE. “We’re the world’s largest purchaser of bourbon for Kentucky bourbon manufacturers. They are done. They’re gone.”
A month later, Trump announced a 25% tariff on steel and aluminum imports from the European Union, upending terms he negotiated in 2018 during his first term. In retaliation, the EU announced new tariffs on approximately $28 billion worth of U.S. goods, including a planned 50% tariff on American whiskey. Trump has threatened a 200% tariff on European wine, Champagne, and spirits should the EU go through with their whiskey tariff.
Reactions Inside The Bourbon Industry
The Kentucky Distillers’ Association (KDA), a non-profit trade association, were among the first to express their concerns. The bourbon industry brings billions to Kentucky in both jobs and revenue and they warn the state’s economic engine could be in peril. "That means hard-working Americans — corn farmers, truckers, distillery workers, barrel makers, bartenders, servers and the communities and businesses built around Kentucky bourbon will suffer," said the KDA in a press release posted to social media on March 3.
Lawson E. Whiting, President and CEO of Brown-Forman, has also expressed alarm at the uncertainty on the ground and its impact on the bourbon economy. As owner of such brands as Jack Daniel’s, Old Forester and Woodford Reserve, the company has much to lose. Whiting calls Ontario’s bourbon ban a “disproportionate” response, saying, "That's worse than a tariff, because it's literally taking your sales away, completely removing our products from the shelves," according to the BBC.
Other producers and distillers are taking a wait-and-see approach. “There’s a lot happening and it’s happening very quickly,” said Michter’s Master of Maturation and Chief Operating Officer Andrea Wilson, according to WAVE. “I think it’s hard to really dial in exactly what’s going to happen right now because the situation is evolving daily.”
While the big producers may be able to weather the storms, independent distillers feel the pinch more acutely. Brough Brothers Distillery, a black-owned liquor brand in Louisville, has seen its plans to expand into Canadian and European markets put on hold due to tariff uncertainties, with CEO Victor Yarbrough telling the Associated Press, "We are collateral damage."
Political Responses and Calls for Action
Kentucky Governor Andy Beshear has publicly criticized the Trump tariffs, expressing concern over their detrimental effects on the state’s economy. "Tariffs are a bad idea, and it's not just me that's saying it," Beshear stated, according to Lexington, Kentucky NBC-affiliate WLEX-TV. He has also engaged in discussions with Canadian officials, urging them to reconsider their retaliatory measures.
Bourbon is a bipartisan issue in Kentucky, and Republican Senators Mitch McConnell and Rand Paul have joined the Democratic Governor in criticizing the Trump tariffs and their fallout. “From bourbon distillers to car manufacturers to makers of fences to the builders of homes, to our farmers, nobody in Kentucky is coming up to me and saying, ‘please put tariffs on things’,” Paul said, according to the Associated Press. “We need to back away from this.”
1 comment
I am proud of Canada for taking this stance. Let’s not forget that Kentucky voted for DT. so this is what they get. They were more concerned about whether KH was black; her laugh and whether she worked at McDonald’s or not to pay attention to what was happening. Let all the Bourbon makers suffer.