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USA Today
02-04-2025
- Business
- USA Today
Kentucky's $9 billion bourbon industry caught in the crossfire of Trump trade war
Kentucky's $9 billion bourbon industry caught in the crossfire of Trump trade war Show Caption Hide Caption Brough Brothers Distillery CEO talks looming tariffs With a 50% tariff set to hit U.S. whiskey by March 31, distillers like Brough Brothers in Louisville, Ky., look to minimize the impact. President Trump's trade wars have negatively impacted American whiskey exports, including Kentucky bourbon. Kentucky bourbon distillers and industry groups are advocating for a return to zero-for-zero tariffs between the U.S. and its trade partners. The bourbon industry is a significant contributor to the Kentucky economy, employing thousands of workers and generating billions of dollars in revenue. Kentucky bourbon has become a key pawn in the trade war raging across the globe, as President Donald Trump continues his on-again, off-again tariff roll out. As the trade war escalates with U.S. trade partners ranging from Canada and Mexico to China and the European Union, some retaliatory tariffs still hanging around from Trump's first administration remain a threat to the bourbon industry. A 50% tariff on American whiskey products, which include bourbon, rye and Tennessee whiskey, was set to return April 1, but was delayed by the EU until April 13, providing a slight reprieve for the industry. The March 20 announcement delaying the whiskey tariff followed a March 13 threat by Trump of a 200% tariff on alcohol from the EU if it were to go forward with its planned tariff on American whiskey. "This is a very positive development and gives U.S. distillers a glimmer of hope that a devastating 50% tariff on American whiskey can be averted," Chris Swonger, president of the Distilled Spirits Council of the United States, DISCUS, said in a statement March 20. "We urge the EU and U.S. to reach an agreement that will return and safeguard zero-for-zero tariffs for spirits trade, benefitting the spirits and hospitality sectors." The tariff threat is leading to economic volatility for American whiskey, which, in turn, is rippling through Kentucky as the state's marquee product works to maintain momentum. "It's obviously bigger than Brown-Forman, and it's bigger than our industry, and every day seems to unfold a different twist on the story," Brown-Forman CEO Lawson Whiting said during the company's earnings call in March. "We're ... shooting to try to get reciprocal zero-for-zero tariffs. That is our key ask. Maybe that's obvious, but to try to keep this industry out of these trade wars." In Kentucky, Louisville-based Brown-Forman, the maker of Jack Daniels, Woodford Reserve and Old Forester, is one of the leading exporters of U.S. spirits globally, with 55% of its net sales coming from outside the U.S. Other major Kentucky bourbon companies that are big exporters include Heaven Hill, the maker of Evan Williams; Beam Suntory, which produces Jim Beam and Maker's Mark products; and Diageo, the owner of Bulleit Bourbon. Trump's alcohol tariffs: Barley farmers face economic strain with tariffs as beer consumption hits 40-year low "The EU's 50% retaliatory tariffs on Kentucky's signature bourbon industry will devastate distilleries across our commonwealth, which employ over 20,000 hardworking Kentuckians and generate billions for our economy," U.S. Rep. Morgan McGarvey, D-Ky., said in a March 12 statement. 'We've done this before' For Kentucky, where bourbon is a $9 billion industry, the impacts of the tariffs extend beyond the bottles on the shelves. "Trump's trade war is hurting the farmers who grow corn, coopers who char and fit our white oak barrels, the men and women who work the line in distilleries, and truckers who deliver the finished product," McGarvey said March 20. In 2018, during Trump's first presidential term, tariffs he levied against the EU on steel and aluminum led to a retaliatory tariff against U.S. products, including American whiskey. Former President Joe Biden was able to negotiate a pause in these tariffs with the EU, but as the deadline on that pause nears, distillers and Kentucky are bracing. "So, we're going to continue to prepare. We've unfortunately, we've done this before," Whiting said during the earnings call. "If it rolls out where they're coming after American whiskey again, and we don't have a situation of reciprocity, then the market for spirits, once again, gets very distorted. That is a big disadvantage for us." From 1997 until the 2018 tariffs, the U.S. and the EU benefited from zero-for-zero tariffs, which industry groups such as DISCUS and the Kentucky Distillers' Association, along with major distillers, want to see returned. With the imposition of the EU tariffs in 2018, American whiskey exports to the region plummeted 20%, losing roughly $112 million for the U.S. spirits industry, according to DISCUS. And during the tariff pause negotiated by the Biden administration, the sector saw a bounce back, with exports to the EU surging roughly 60% and drawing in $699 million in 2024 exports. "Over the past three years that these EU tariffs have been suspended, American whiskey exports to the EU have soared, supporting jobs at U.S. distilleries, as well as local farms," Swonger said March 20. Canadian response Most recently, Trump announced he will share a "reciprocal tariff" plan on April 2, giving countries a proposed tariff rate based on their own rates, non-tariff trade barriers and other factors while also providing an opportunity to negotiate around the "tariff wall," USA TODAY previously reported. In early March, Trump reinstated 25% tariffs on Canada and Mexico. Canada was quick to respond to this trade threat and ushered in its own multi-round set of tariffs, with the first being issued March 5 and subsequent rounds set to follow in late March and again in April. Part of the initial response from Canada included an immediate halt to purchases and the removal of U.S. beverage products, including Kentucky bourbon. "That's worse than a tariff, because it's literally taking your sales away, completely removing our products from the shelves ... that's a very disproportionate response," Whiting with Brown-Forman said. For now, the watch-and-wait game for distillers and Kentucky continues. "It's not just that bottle of bourbon, it's all that it takes to make that bottle of bourbon, to get it to where it needs to go, and everybody that touches it in between, including bottlers, distributors, and you name it," state Sen. Gerald Neal said on CNN News Central on March 17. "Everybody gets affected; it's a big deal in Kentucky." Contact business reporter Olivia Evans at oevans@ or on X, formerly known as Twitter, at @oliviamevans_.
CBC
29-03-2025
- Business
- CBC
Explicit Canadian emails target bourbon maker as Trump's trade war intensifies
Standing next to half a dozen white oak barrels full of aging Kentucky bourbon, on the floor of his small Louisville, Ky., distillery, Victor Yarbrough holds up his laptop and starts reading his emails. As the co-founder of Brough Brothers Distillery, he's visibly taken aback by what's landed in his inbox. And as a polite businessman, there's some of it he will not say out loud. There are roughly 50 emails in total, and most of them negative. Some of them are angry; a few are even explicit. "You are heading for a full recession in the states with these moronic tariffs and talk of the 51st state bullshit," says one email. "I'm just a farmer here in Canada but even I know this Canadian and probably world boycott could last four years." Another reads: "Kentucky's problem is that people don't realize that when you vote republican [you] get f----d again," which seems to be some sort of play on U.S. President Donald Trump's slogan to Make America Great Again. talking about how the tariffs have negatively affected his business, Brough Brothers Distillery, the only Black-owned bourbon distillery in Kentucky. "Ultimately I think from what I've seen — it's not really about tariffs, it's more about the sovereignty of Canada, I think is what's really coming through in these emails," said Yarbrough. He calls the content shocking and hurtful, especially with years of fond memories of vacations to Toronto before he became a father. "I love Canada," he said. After Trump imposed tariffs on some Canadian goods, Canada retaliated with a tariff package of its own, and some provinces decided to pull American alcohol, including Kentucky bourbon, off of store shelves. WATCH | Facing the backlash against bourbon: This American distiller says they're getting Canadian hate mail 7 hours ago Duration 2:22 For Victor Yarborough of Louisville's Brough Brothers Distillery, the raging trade war between Canada and the U.S. is impacting the Kentucky bourbon maker's bottom line. But it's also making its way into his inbox in shocking ways. This happened as Yarbrough was in the process of negotiating a deal with New Brunswick to expand his sales into Canada. The goal was exporting roughly 10,000 bottles of bourbon into the province this year. Yarborough says the province put those negotiations on hold due to the ongoing trade war. "These are really strong emails that we get and, unfortunately … the negative implication for us is that, hey, we are the bad guys here," Yarbrough told CBC News during an interview at his distillery. "We're just stuck in the middle," he said. "I think tariffs aren't good for anyone." Canada sours on American whiskey Kentucky's alcohol industry was facing some troubles before the trade war officially began. In January, Brown-Forman — which produces well-known bourbon brands such as Jack Daniel's, Woodford Reserve and Old Forester — announced it would be cutting its global workforce by 12 per cent, which includes about 200 jobs at one of its Louisville plants that constructs barrels. Kentucky Gov. Andy Beshear says he worries there could be widespread job losses if there is not a resolution to the tariff dispute. "It's still early, but what we're seeing is some layoffs in the bourbon industry, [in] both bottling plants and one of our larger distillers," he said during an interview with CBC News at the state house in the capital of Frankfort. He added they're "also seeing some real concern amongst our farmers about the amount of food that we export throughout the world." Kentucky exported more than $47-billion US worth of goods last year, with Canada its largest customer accounting for more than $9 billion of those sales. While bourbon is not the top export — it's actually products related to the aerospace industry — the spirit is what the state is best known for. And it's become a symbolic target for Canadian retaliation. "The governor of Kentucky said don't touch our bourbon. I said, 'Governor that's the first thing we're going after,'" said an angry Ontario Premier Doug Ford when announcing his response to U.S. tariffs. "We're the largest purchaser of bourbon in the world, for Kentucky bourbon manufacturers, they're done, they're gone," Ford told reporters in early March. Beshear, a Democrat who is vocally opposed to tariffs, says that's not how he remembers his conversation with Ford. "There wasn't any macho back-and-forth, we were both talking about how tariffs will hurt both of our countries," he said. WATCH | Ford launches trade war countermeasures on alcohol: Ontario pulls U.S. alcohol from LCBO shelves in response to tariffs 24 days ago Duration 2:21 Ontario is pulling 3,600 U.S. products off LCBO shelves in response to Trump's tariffs, with Premier Doug Ford encouraging people to buy Canadian brands instead. Canada's response is understandable, Beshear says, but he suggests targeting Kentucky is unfair because so many of its political leaders are advocating against Trump's tariff policy. "I get that you're going to stand up for yourselves, that's what we would all do, but be strategic," he said. "Having tariffs that just respond to all American products, you know, doesn't differentiate again between those who are speaking up and out about how tariffs hurt … and those who are blindly supporting the president." 'Have to be patient': Kentucky Trump supporter Despite consequences for the bourbon industry, there remains plenty of support for Trump in Kentucky. He won the state in all three of his presidential races, earning nearly 65 per cent of the vote in 2024, up from 62 per cent in both 2020 and 2016. "I love everything he's doing," said Ted Jackson, a Louisville-based businessman who sells cigars online and has a website that sells Trump merchandise. "I trust President Trump and the team. This idea on tariffs is not something that he just dreamed up overnight, there's been a lot of discussion, a lot of planning, a lot of justification for it." Trump has long argued that his trade agenda will help rebuild American manufacturing, and that companies will build new factories in the U.S. in order to avoid paying tariffs. Though he has acknowledged there may be some "disruptions" to the cost of living. "Ultimately it'll all work out. There may be some bruises along the way, but he's trying to do something … he's trying to fix something," Jackson said. "The bourbon industry is not going to go away in Kentucky, and people have to be patient and in time all will right itself." Trump voters in rural parts of the state shared similar attitudes. They're weary about tariffs, but believe the President when he says in the long run this will help the economy. "I think he is excellent," said Steve Stinnett, a retiree who spoke with CBC News at a riverside park in Meade County. Stinnett says he stands by his vote, even though he may get caught in the trade war. "The tariffs that probably will affect me will be on any future car purchases. I hate the fact it's going to cause that kind of situation upon the American citizens as well as the Canadian citizens." Sue Troutman, a retired bartender, says she's also willing to give Trump the benefit of the doubt. "If he thinks it can help, more power to him. But he needs to realize he may be hurting some of the American people and the other countries," Troutman said. She says she doesn't regret her vote for Trump either, though she's less enthusiastic than some of her fellow Trump supporters. "When the election came around, he was the better of two evils," she said.
The Guardian
15-03-2025
- Business
- The Guardian
‘They're on. They're off. We can't plan' – bourbon makers dazed by Trump tariffs
Brough Brothers Distillery is in the midst of a big expansion. A fifteen minutes' drive from its small distillery in the West End neighborhood of Louisville, Kentucky, workers are toiling away on its new site, seven times the size of the old one, in the heart of Bourbon City. This has been a long time coming for Brough Brothers, which opened its first location in 2020 and had drawn up ambitious plans for international growth in 2025. Then Donald Trump returned to power. The Trump administration is conducting a sweeping overhaul of the US economy, using tariffs – levies on foreign goods, paid for by importers – in an effort to reset the country's trade ties with the world, revive its industrial heartlands and force its neighbors to address illegal immigration and drug trafficking. 'Tariffs are easy, they're fast, they're efficient, and they bring fairness,' Trump said earlier this month. The reality has proven more complex, and confusing, than the bold rhetoric. Threats have been leveled and then dropped; deadlines declared and delayed; tariffs imposed and postponed. Chaos reigns. Victor Yarbrough, CEO of Brough Brothers, does not want tariffs. But he would take the certainty of tariffs over the current racket emanating from the White House around whether they will, or won't, be imposed; when; and on which markets. 'They're happening. They're not happening. They're on. They're off. It doesn't allow us the timeframe we need,' Yarbrough said in an interview. 'We can't plan.' Yarbrough spoke to the Guardian the week after Trump declared there to be 'no room left' for an economic peace deal with Canada; imposed sweeping 25% tariffs on US exports from the country; and accused its prime minister of using the dispute to cling to power; only to offer a one-month reprieve. During the interview, the president lashed out against Ontario's decision to retaliate against his tariffs with a 25% surcharge on electricity exports to the states of New York, Michigan and Minnesota, announcing that tariffs on Canada's steel and aluminum exports to the US would be doubled. Hours later, the threat was revoked. Brough Brothers, Kentucky's first African American-owned distillery, was 'in the middle of getting a deal done' to start selling its spirits in New Brunswick when Trump took aim at Canada, straining economic ties with a typically reliable market for US exporters. 'We've effectively had to put the deal on hold indefinitely,' said Yarbrough. Tensions are flaring worldwide. The day after the interview, the EU unveiled a €26bn ($28bn/£22bn) list of US targets – including bourbon – that it plans to hit with retaliatory tariffs, after Trump hiked US tariffs on steel and aluminum. In response, the US president threatened a 200% US tariff on European alcohol. Several Canadian provinces meanwhile removed US liquor from store shelves as part of the dispute between Washington and Ottawa; a move that some American producers said was worse than a tariff. The question of how much it might cost to sell a product into a market was supplanted by whether it could be sold there at all. 'Having all US alcohol pulled from the shelves in Canada is a huge blow for the industry,' said Yarbrough, who just a few months ago had planned to start selling into markets including Canada, the UK, Germany, France and South Africa. 'Now we're Plan B. 'It's Canada today. It's the UK, it's the European Union, in a couple of weeks. It's China now. Is there another country [on which] they're going to implement tariffs?' he said. 'Can we pivot to a Brazil? Can we pivot to a Colombia? Can we pivot to a Panama? Or are they going to have tariffs the next month? It's just difficult to facilitate any kind of plan, just because there's so much uncertainty.' A day after we spoke, the EU vowed to impose steep tariffs on a carefully targeted list of US exports after Trump hiked US duties on steel and aluminium. Bourbon whiskey was among them. Yarbrough knows trade, having previously imported bourbon from the US and exported English cider while based in the UK. He knows tariffs, too. 'Ultimately it's a tax,' he said, noting that the real increase in costs is likely to be higher than the official rate, as the duty twists each link of the supply chain. A 25% tariff, for example, would probably prompt both the importer and the retailer to adjust their costs, according to Yarbrough. 'You're not just speaking about that 25%. That's just the baseline,' he said. 'These incremental costs add up. It's beyond just the 25%.' The tariffs mess is rattling this deep red state. Louisville has so many bourbon production plants that locals say they can often smell the whiskey in the air. A vast bottle of Old Forester towers over the headquarters of Brown-Forman, the drinks conglomerate. Kentucky Republicans have urged Trump to dial down his tariff threats. The Republican senator Rand Paul has warned duties would 'inevitably' raise prices and invite retaliation that would reduce bourbon exports. As a stock market sell-off took hold, he wrote on social media: 'When the markets tumble like this in response to tariffs, it pays to listen.' Lobbyists insist the spirits sector is a model of the 'fair and reciprocal' approach on trade that Trump claims to be seeking. In the two decades after the US and EU eliminated tariffs on most spirits in 1997, bilateral trade grew by 450%, according to the Distilled Spirits Council of the US. 'Tariffs back and forth would be catastrophic for the industry,' Chris Swonger, president and CEO of the council, told the Guardian. Sure, he said, the US does have a trade deficit with key markets on spirits – importing more from markets like the EU, UK, Canada and Mexico than it exports to them. 'But it's not because of trade barriers. It's because American consumers love scotch. They love Irish whiskey … American consumers love tequila, and Canadian whiskey.' Within these global markets, however, free trade – without tariffs, or barriers – has set the stage for the US industry's rapid growth, Swonger claimed, with the number of distilleries surging from 60 to about 3,100 in about two decades. 'It's a great American success story,' he said. Trump, who rarely speaks in minimal terms, has conceded his grand economic reset might cause 'a little disturbance' for companies and consumers. The spirits sector, so often caught in the crossfire of trade disputes, fears the turbulence may well be bigger than billed. Operators are calling on the White House to prioritize talking over tariffs. 'I get it. Two brothers are fighting,' said Yarbrough. 'Let's go have a drink and figure this out. Let's go have a bourbon and figure this out.'
CBC
12-03-2025
- Business
- CBC
U.S. distillers call for 'toasts, not tariffs' as trade war heats up
Victor Yarbrough knew Canada meant business when he saw liquor stores in Ontario and other provinces pull bottles of U.S. spirits off the shelves last week. "That was a shock, I believe," said Yarbrough, who founded and runs Brough Brothers Distillery in Louisville, Ky., with his brothers Bryson and Chris. "The message was heard on our end." Brough Brothers, whose honey-coloured Kentucky bourbon is described as medium-bodied and features "fruity notes of green apple and pear" with "subtle hints of ginger and nutmeg," was in the midst of negotiations with the New Brunswick Liquor Corporation (ANBL) when the current trade war between Canada and the U.S. flared up. Reacting to U.S. President Donald Trump's threat of 25 per cent tariffs on Canadian exports, Canada introduced its own list of counter-tariffs on March 4 that includes American whiskies, rum, vodka, gin and other spirits. In Ontario and other provinces, existing stock was quickly removed from the shelves of government-run liquor outlets and stored in boxes. Brough Brothers, whose Kentucky bourbon is already available in 23 states and which is making forays into the European market, has had to put its Canadian expansion plans on hold. Yarbrough says the on-again, off-again tariffs have caused "angst and anxiety" within the local industry, adding the uncertainty is the worst part. "What's going to happen next?" he asked. "For us, it's negatively impacting us from a business perspective." Yarbrough is also worried about the prospect of lingering resentment north of the border, and the damage it might do to his family's brand. "From a marketing perspective, are Canadians going to be mad at us small bourbon producers?" he wondered. "I personally think it's beyond tariffs now, so do I need to come visit and shake some hands myself and say, 'Hey, we're working through this. Just give us another chance.'" 'Far-reaching consequences' The Kentucky Distillers' Association warned last week that retaliatory tariffs and other punitive measures will have "far-reaching consequences" on the industry, which is estimated to directly and indirectly employ some 23,000 people in the state. "Bourbon jobs are American jobs, and we grow bourbon jobs by opening markets across the globe," the association said in a statement. "Retaliatory measures against bourbon harm these markets and jeopardize growth for years to come, including the unjust and disproportionate removal of American spirits from retail shelves and prohibition on new purchases of alcohol from American companies." In Ontario, Premier Doug Ford said some 3,600 American products would be removed from the LCBO. (U.S. imports account for nearly $1 billion of the Ontario retailer's $7 billion in gross annual revenues.) During a conference call with investors last week, Lawson Whiting, CEO of the company that produces Jack Daniel's Tennessee Whiskey, called the move a "disproportionate response" to the tariff threat, even though exports to Canada account for just one per cent of the company's sales. The removal of U.S. liquor from Canadian retailers is "worse than a tariff because it's literally taking your sales away," Whiting said. 'A lose-lose proposition' Chris Swonger, president and CEO of the Distilled Spirits Council of the United States, also suggested the LCBO and other provincial retailers had gone too far by removing U.S. liquor from their shelves. "I understand the strong emotion that is underway within our longtime partners and friends in Canada. This industry has nothing to do with that," Swonger told CBC on Friday. "Pulling American spirits products off the shelves — I say it with great respect — is over the top, and doesn't really help Canada that much either, I'm afraid." Swonger said his organization is in close talks with both its Canadian counterpart and the Trump administration in an effort to seek a solution and "let cooler heads prevail" before the industry on both sides of the border suffers collateral damage in the current trade war. "Toasts, not tariffs," Swonger urged. "It doesn't accomplish anything, and it just creates a lose-lose proposition for two great industries that are connected and intertwined together." Andy Beshear, Kentucky's Democratic governor, called the U.S. tariffs on Canadian exports a "bad idea" and placed the blame squarely on the White House. "President Trump started this trade war, and we all knew that if he did other countries would have to respond," Beshear said last week. Smaller distillers will suffer most Mark Rucker, a Kentucky-born attorney whose website and podcast The Bourbon Life has made him an "unofficial ambassador" for his state's famous export, says the industry has made an astounding comeback since the 1990s when it was "barely hanging on." No one wants to see those gains go to waste over an unnecessary trade war, he said. "We've ridden a great wave over the last 20-plus years. Nobody wants to see that wave stop," Rucker told CBC on Monday. Rucker believes the big-name "heritage" brands will weather the storm, but if the cross-border trade war grinds on it will be the smaller distillers that suffer. "These smaller players, these guys that spent the time and effort … to get into Canada, it will have an impact on them," he said. "I know a lot of these guys, and it does concern me what's going to happen with them." Rucker said what distillers really want is for decision-makers on both sides of the border to defuse the situation for the good of the industry, not point fingers at each other. "If this continues and we start seeing some of these smaller brands unfortunately go under, then … yes, I think there will be some push-back and some dissent. But for now, no, I'm not really seeing that," he said. "We really don't focus a lot on politics just because it can be divisive, and to me bourbon is something that is made to bring people together."
The Independent
11-03-2025
- Business
- The Independent
Kentucky bourbon makers fear becoming 'collateral damage' in Trump's trade war
With a new distillery set to open soon, the makers of Brough Brothers bourbon in Kentucky were ready to put their business plan into action. They were looking to ramp up whiskey production to break into lucrative new markets in Canada and Europe. Now the on-again, off-again threat of tariffs has disrupted those plans. Efforts by the Black-owned distiller to gain a foothold in Canada are on hold, as are plans to break into Germany and France, said Brough Brothers Distillery CEO Victor Yarbrough. That's because the iconic American spirit's widening global appeal is caught in the crossfire of trade conflicts instigated by President Donald Trump. "It's extremely frustrating,' said Yarbrough, who started the Louisville distilling company with his brothers, Bryson and Chris. 'We are collateral damage.' For distillers looking to sell to consumers of all political stripes, talking politics can be as distasteful as discussing Prohibition. But along with the turmoil and uncertainty over tariffs, bourbon makers and other U.S. firms trying to do business in Canada are confronting public relations challenges still reverberating from the president's blunt-force 'America First' approach to international relations. With Canadian hockey fans booing the U.S. national anthem and some liquor stores north of the border clearing American spirits from their shelves even before there's clarity over tariffs, businesses like Brough Brothers are watching to see how the trade conflict plays out. In the building being converted into the new distillery near the Ohio River, drywall dust covers the floor of the project that the brothers hope will raise the company's profile in the ultra-competitive bourbon world. 'I believe there's going to be some type of repair of the relationships that needs to happen," said Yarbrough, who was hoping, before the trade war erupted, to introduce his bourbon in New Brunswick and later expand to Ontario and other parts of Canada. "So I think some type of media blitz, PR blitz is definitely going to have to take place.' An expanding market hampered by uncertainty The trade wars pose an immediate threat to an American-made success story, built on the growing worldwide taste for bourbon, Tennessee whiskey and other products. Kentucky Democratic Gov. Andy Beshear said the president's zig-zagging tariff policy is hurting the American economy and will lead to higher consumer prices while disrupting business. 'It's not just the imposition of tariffs, it's this month-to-month, 'I may do it to you at any moment' policy,' said Beshear, a potential presidential candidate in 2028. 'You can't create stability.' Trump on Thursday postponed 25% tariffs on some imports from Canada for a month amid fears of the economic fallout from a broader trade war. Yarbrough said his company's expansion plans are still in limbo. 'It doesn't change our situation," he said. 'Just as quickly as it changed to a reprieve, it could just as quickly turn into next month that we're back on.' For an industry that has to plan well into the future, based on aging its whiskey products, such angst is widespread in Kentucky, which produces 95% of the world's bourbon supply. At this point even a delay in tariffs wouldn't alleviate the practical problems confronting U.S. whiskey makers. 'The issue for us is long-term planning, and a postponement does nothing for us in long-term planning except leaves it still up in the air," said Judy Hollis Jones, president and CEO of Buzzard's Roost in Louisville, which sells to two provinces in Canada and has been looking to expand. 'Maybe other people adapt to it easier than I do, but I tend to like some certainty," Jones said. The Kentucky Distillers' Association says the newest trade conflicts feel like deja vu. The industry group has long sounded the alarm that tariffs and retaliatory levies would wreak havoc on the spirits industry. Along with the North American trade dispute, the European Union is set to reinstate a tariff by April 1 on American whiskey if nothing is done to head it off. That trans-Atlantic dispute is a reprise of Trump's first-term tariffs on European steel and aluminum. The EU's retaliatory tariff caused American whiskey exports to the EU to plunge 20%, costing distillers more than $100 million in revenue from 2018 to 2021, the Distilled Spirits Council says. Once the tariff was suspended, EU sales rebounded for American distillers. Threat of 'irreparable harm' to distillers Now, Europe's infatuation with Kentucky bourbon and other U.S. spirits is threatened by the potential 50% tariff — double the previous levy — that would inflict "irreparable harm to distillers large and small,' said Chris Swonger, the council's CEO. Tariffs amount to a tax, which whiskey producers can either absorb in reduced profits or pass along to customers through higher prices — and risk losing market share in highly competitive markets. In 2024, the EU was by far the largest export market for U.S. distilled spirits, followed by Canada, the council said. Trump maintains that open trade has cost the U.S. millions of factory jobs and that tariffs are the path to American-made prosperity. Large distillers possess the capital and market reach to ride out disruptions caused by tariffs — built-in luxuries that most small producers don't have. Canada accounts for just 1% of total sales for Brown-Forman Corp., the maker of Jack Daniel's Tennessee Whiskey, and the Louisville-based company could withstand disruptions there, said its CEO, Lawson Whiting. But Whiting said the decision by Canadian provinces to take American products off store shelves is 'worse than a tariff because it's literally taking your sales away.' He called it 'a very disproportionate response to a 25% tariff.' The threat of a prolonged trade war has Brough Brothers exploring other options. They could lean harder into domestic sales or look for other markets overseas — but again, it's hard to plan. 'Talking about this is starting to make my head hurt,' Yarbrough said. For Tom Bard, another Kentucky craft distiller, the risk is that all his hard work to gain a foothold in Canada could evaporate due to the cross-border trade conflict. Bard and his wife, Kim, own The Bard Distillery in Muhlenberg County in western Kentucky. Their products had penetrated British Columbia and Alberta, but a new purchase order for north of the border is on hold amid Trump's ever-changing trade war. 'That hurts,' Bard said. 'For a small distillery like us, where every single pallet that goes out the door makes a huge difference, that's huge for us.' Bard said his team invested heavily to break into Canada, where business grew so quickly that he had hoped it would account for at least 25% of his overall sales this year. 'We'd love to ship as much of it as we can to Canada,' Bard said. 'We just expanded our distillery to take advantage of all the global demand for our products. What we hate is that once we get this equipment online this year, that we won't be able to run it full throttle because we'll be afraid to put too much inventory away not knowing what's going to happen." The dispute needs to be resolved before Canadian distributors will risk accepting shipments of American spirits, he said. Bard plans to ramp up domestic distribution to try to make up for lost sales in Canada. 'We're small-business Americans, so we're going to make it work,' he said. 'But it would be nice to not have these roadblocks.' ___
