New questions for Kentucky bourbon industry as Trump tariffs hit steel, aluminum imports
Kentucky bourbon makers thought they had a breather with the last-minute suspension earlier this month of broad-based tariffs involving Canada and Mexico.
Then, on Feb. 9, President Trump announced a 25% blanket tariff on steel and aluminum imports, with “reciprocal tariffs” to come this week as well.
That news likely sent a chill down the back of the neck of every export-bound bottle of American whiskey: Steel and aluminum tariffs were the trigger for 25% tariffs on American exports to the European Union in 2018.
Could this signal an impending trade war again?
“There’s a question mark as to what EU will do, or change given the announcement yesterday,” said Christine LoCascio, trade police expert for the Distilled Spirits Council of the U.S., at a Tuesday economic briefing. “We encourage everyone to talk so that we don’t enter a situation where tariffs are imposed on our products again.”
Chris Swonger, president and CEO of the Distilled Spirits Council of the U.S., said he just returned from Brussels, where he had been lobbying to “pull distilled spirits out of the mess we’ve been in.”
But he conceded: “There are a lot of challenges coming at us.”
If the EU, which is by far the biggest importer of American whiskey at more than $705 million in 2024, goes forward with a 50% tariff at the end of March, or decides to impose something sooner, that could have a big impact on spirits producers in both economies, he said.
“Unfortunately, when we got embroiled in this in June 2018 .... we did get in a tit-for-tat trade war and we saw dramatic declines of over 20% over a three-year period,” Swonger said. But there were also dramatic declines in the imports of European spirits such as liqueurs and cordials.
Swonger and others are pushing hard to keep spirits out of the mix this time.
“We’re encouraging all our great trading partners to work transactionally with the Trump administration to resolve some of the bigger issues he’s determined are important as a result of the election,” he said, such as border security and stopping illegal fentanyl trade.
Also still hanging out there: Possible tariffs involving Mexico and Canada, which could take effect March 4.
“Managing the potential risks and uncertainty when it comes to tariffs is going to continue to be a priority for us,” Swonger said.
Swonger said industry members are pressing the administration to exempt country-specific products such as Canadian whiskey, Mexican tequila and American whiskey from the tariffs, saying that any trade war would have a significant impact on the still-recovering restaurant and hospitality industry as well as spirits makers.
Overall, the U.S. spirits supplier revenue declined 1.1% in 2024, according to data presented at the briefing. Revenue decreased by $424 million from 2023 levels, driven in part by the increased spending by consumers on other items, such as housing, utilities, health care and services despite the slowdown in inflation.
The hospitality industry has been hit particularly hard, according to data from the U.S. Bureau of Labor Statistics, which showed that job growth is fairly stagnant, with only 92,000 jobs added in 2024.
