Last July the European Union, Mexico, and Canada warned that if President Donald Trump enacted trade tariffs on imports of steel and aluminum, they’d be forced to enact retaliatory tariffs on US exports. For some, it seemed unthinkable that the president would toss Molotov Cocktails into the backyards of our closest allies. Yet, in March, Trump announced a 25 and 15 percent tariff on imports of steel and aluminum from the EU, Canada, and Mexico respectively. The EU and Mexico held to their word and announced a 25 percent tariff on all imports of American spirits, taking dead aim at the bourbon industry.
This is a pretty hard blow for the booming industry. Over half of all Kentucky and Tennesse whiskey is exported to Europe. In fact, the US exports $1 billion in booze annually, half of which is just bourbon. So, yeah, this isn’t great for small distillers and family run businesses from grain and corn farmers to coopers to distillers to bottlers to the trucking industry. According to the Courier-Journal, Kentucky alone carries “17,500 jobs” spirits jobs which equates to “$800 million in payroll.” All of that is at risk now.
Basically, what we’re looking at is a severe slowdown in exports which means the local big distillers will have to start flooding the American market with marked down stock. And, yes, that means cheaper macro whiskey for you. But that also means they’ll choke out the competition and small, local distilleries will close, coopers will shutter, truckers will lose shipments, and farmers will lose clients for their grains and cereals. To put it simply, everyone in those deeply red states that helped Trump win will lose money and jobs along with all the security that comes with said jobs and money.
Then, of course, there are the local taxes that the whiskey industry generates. Kentucky alone earns “$825 million in federal, state and local taxes each year,” according to the Courier-Journal. Kentucky makes $20 million just on taxing barrels and that money largely goes to funding the school system. So, fewer distilleries, less product, and fewer customers all means less money in the local coffers.
It’s really hard to see an upside here for the American spirits industry. If small time operators can’t compete on the international market, there’s no chance of growth. Add in the fact that local whiskey distilleries are popping up all over the world and things could get bleak.
If you live in Kentucky, it may be time to call up Senator Mitch McConnell and demand action. The senator has softly pushed against Trump’s trade war with broad statements here and there about how a trade war is a bad idea. It seems to have fallen on deaf ears. Now, it’s time to play hardball to preserve and bolster one of the great American industries — Bourbon.
It’s also worth noting that this isn’t just bourbon. Mexico has also imposed new tariffs on pork, apples, and potatoes along with steel which will all have harsh consequences on US producers. China is doing the same. It looks like there are going to be some trying times ahead for a lot of hardworking Americans.