Europe’s retaliatory tariffs will affect KY bourbon, farms, peanut butter. Stocks tumble
Kentucky bourbon makers and farmers are facing massive new tariffs on one of their biggest export markets.
The European Union announced Wednesday it will impose 50% tariffs on American whiskey, beef, peanut butter and other farm and industrial products starting next month.
The retaliatory trade action covering $28 billion in goods from the U.S. is in response to President Trump’s imposition of 25% tariffs on aluminum and steel imports.
The Associated Press reported that Canada also will announce more than $20 billion in retaliatory tariffs.
Trump has oscillated on tariffs multiple times over the past several months. His administration announced tariffs on Canada and Mexican products but later rolled back or exempted many products after both Canada and Mexico threatened retaliatory tariffs on American products.
While Kentucky is known for its bourbon and Thoroughbred horses, it’s also the biggest beef-producing state east of the Mississippi River, a substantial grower of soybean, corn and wheat, and a major poultry state as well.
Higher tariffs could impact exports on several of the state’s top agricultural commodities.
William Snell, a professor at the University of Kentucky who specializes in agricultural economics, said overall tariff and trade wars hurt agricultural products, but there are ways for the U.S. to offset any losses due to additional taxes on American products.
“The EU is the largest US ag trade deficit of any of our major export markets. This used to not be the case as a couple decades ago we, the U.S., used to run a significant ag trade surplus with the EU. A couple of concerns for KY have been the trade restrictions on our beef and of course the tariffs applied to our bourbon,” Snell said.
It’s not just additional taxes on Kentucky export products that hampers the economy; it’s the increase in prices on other goods that farmers need like fertilizer, Snell said.
“Overall tariffs/trade wars hurt US agriculture as we lose export markets in response to retaliation and input prices for imported goods like fertilizer, parts, and equipment coming into the U.S. becoming more expensive. Trump offset this last time partially with trade assistance payments called Market Facilitation Payments,” he said.
U.S. Agriculture Secretary Brooke Rollins has indicated that there will be additional Market Facilitation Payments if trade wars results in losses for American farmers, he said. But that’s not a guarantee.
More importantly, farmers have been waiting for a re-authorization of the Farm Bill, which sets agricultural policy and payments. The last Farm Bill was passed in 2018.
“Bottom line is that the ag economy is slumping, Farm Bill dollars are not going to be there to help much, and the domestic market can’t make up for lost exports in a lingering trade war,” Snell said.
Bourbon stocks fall on announcement
The news of coming tariffs triggered a nosedive in bourbon stocks on Wall Street, with Jack Daniel’s maker Brown-Forman, which also makes Woodford Reserve premium bourbon, dropping 6%. Jack Daniel’s is the biggest selling American whiskey in the world, selling more than 16 million cases globally in the last nine months.
Other publicly traded bourbon makers also dropped, including Suntory, which owns Jim Beam and Maker’s Mark; global spirits giant Diageo, which makes Bulleit bourbon; Campari, which makes Wild Turkey and Wilderness Trail; and Pernod Ricard, which makes Jefferson’s.
Chris Swonger, president and CEO of the Distilled Spirits Council of the U.S., a lobbying organization that represents the industry, called the news “deeply disappointing” and said the 50% tariff “will severely undercut the successful efforts to rebuild U.S. spirits exports in EU countries. ... Reimposing these debilitating tariffs at a time when the spirits industry continues to face a slowdown in U.S. marketplace will further curtail growth and negatively impact distillers and farmers in states across the country.”
According to the spirits council, during 25% tariffs in 2018, American whiskey exports to the EU, which is the largest export market for bourbon and Tennessee whiskey, fell 20% from $552 million in 2018 to $440 million in 2021.
While the tariffs were paused under President Biden for trade negotiations, exports to the EU surged 60%, climbing to $699 million in 2024, according to the council.
Brown-Forman reported the 2018 EU tariffs cost the company more than $70 million.
Kentucky U.S. Rep. Morgan McGarvey, D-Louisville, co-chair of the Congressional Bourbon Caucus, released a statement blaming Trump for chaos inflicted on the industry and farmers.
“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. And for what? Donald Trump’s petty trade war isn’t lowering costs or strengthening our economy, it’s doing the opposite — costs are skyrocketing, our economy is tanking before our eyes, and now thousands of Kentucky families face even more uncertainty,” McGarvey said.
“Tariffs have a time and a place, but they must be strategic and focused in order to accomplish their intended goal and limit collateral damage,” McGarvey contined. “Not only are Trump’s on-again, off-again tariffs chaotic, they are overly broad, lack any real strategy or end game beyond wielding power just for the sake of it, and will hurt American manufacturing, not revitalize it.”
Gov. Andy Beshear also blasted the tariffs, saying it could lead Kentucky and the country into an economic recession.
“Trump’s Treasury Sec. Howard Lutnick said it would be ‘worth it’ if tariffs caused a recession. A recession means our families will make less, things will cost more, and our people will suffer. And it will be 100% caused by this federal administration. Sad, crazy and avoidable,” Beshear said on X.
Republican U.S. Senators Mitch McConnell and Rand Paul have also criticized Trump’s moves to add tariffs.
The stock price of JIF peanut butter maker J.M. Smucker Co. also fell Wednesday, dropping almost 2.5% in early trading.
The company owns the plant on Winchester Road in Lexington that makes most of the JIF peanut butter produced.
Kentucky economy heavily dependent on exports
In 2024, Kentucky businesses and agricultural producers exported a record $47.8 billion of goods to the world, according to the Office of the U.S. Trade Representative.
The office lists Kentucky as the 13th-largest exporting state nationwide.
And that export market to the world has dramatically grown in the past decade.
In 2024, Kentucky goods exports were $47.8 billion, an increase of 72% or $20 billion, from its export level in 2014.
Other key facts about Kentucky’s export economy from federal statistics:
- The state’s largest market was Canada. Kentucky exported $9.3 billion in goods to Canada in 2024, representing 20 percent of the state’s total goods exports.
- Canada was followed by the United Kingdom ($4.9 billion), France ($4.8 billion), China ($4.3 billion), and Mexico ($4.2 billion).
- Kentucky’s exports to the European Union was $11.1 billion
This story was originally published March 12, 2025 at 11:47 AM.
