Bourbon Industry Faces Looming Threat of EU Tariffs
The iconic American whiskey, particularly Kentucky’s beloved bourbon, is once again at risk of facing steep tariffs as a trade dispute between the United States and the European Union (EU) looms. With the possibility of tariffs rising to an alarming 50%, the bourbon industry is navigating a time of uncertainty that could impact jobs, economic output, and the vibrant spirits market.
The Trade Tariff Timeline
In 2018, then-President Donald Trump imposed tariffs on imported steel and aluminum, citing national security reasons. The EU retaliated with a 25% tariff on American whiskeys, resulting in a notable 20% decline in exports. The tariff was suspended during President Joe Biden’s administration, but without a resolution to ongoing trade discussions, the suspension is set to lapse by March 2025, threatening the return of even higher tariffs.
Economic Impact on the Bourbon Industry
- Kentucky produces approximately 95% of the world’s bourbon, supporting over 23,000 jobs and generating $9 billion in economic output annually.
- The retaliatory tariffs previously led to a drastic drop in whiskey exports to Europe, with earnings plummeting from $552 million in 2018 to $440 million by 2021.
Chris Swonger, President and CEO of the Distilled Spirits Council of the United States (DISCUS), emphasized that the whiskey industry was unfairly caught in the broader U.S.-EU trade spat. Swonger remarked, “Our industry got caught up in a tit-for-tat trade dispute… not only bourbon was affected, but other sectors in the distilled spirits industry were affected as well.”
The Path Forward
As the tense negotiations continue, industry leaders and political figures are advocating for a permanent resolution. Gov. Andy Beshear of Kentucky urged the incoming administration to consider the state’s reliance on the bourbon industry, which is deeply interwoven with its economic fabric.
The situation has garnered concerns from high-profile stakeholders like Kentucky Distillers’ Association President Eric Gregory, who explained that absorbing escalating tariffs is not sustainable for many companies. “If that goes to 50%, I don’t know many companies that can absorb a 50% tariff,” Gregory explained.
Real-World Implications
With American whiskey exports to the EU having bounced back after the suspension, the looming deadline presents a potential setback. The EU market currently represents 44% of all American whiskey exports. Industry experts are vigilantly monitoring the situation as discussions unfold, highlighting the dire need for a resolution to preserve the industry’s growth.
The bourbon boom in Kentucky has fostered a series of massive investments aimed at capitalizing on global demand. Projects across the state have infused billions into the local economy, enhancing distillery capacities and storage facilities.
As the suspense builds, the bourbon industry, along with its enthusiasts worldwide, awaits the outcome of negotiations that could either elevate this quintessentially American story to new heights or cast a long shadow over its progress.
