Politics & Government

Trump tariffs would imperil Kentucky’s bourbon ‘renaissance’

Senate Majority leader Mitch McConnell delivers a speech at the Willard Hotel in Washington, DC, at a bourbon tasting hosted by the Henry Clay Center for Statesmanship in February.
Senate Majority leader Mitch McConnell delivers a speech at the Willard Hotel in Washington, DC, at a bourbon tasting hosted by the Henry Clay Center for Statesmanship in February. McClatchy

Back off the bourbon. And stop trying to annoy Mitch McConnell.

That’s the message from two powerful Kentucky interests — distillers and McConnell, the Senate’s most powerful leader.

Slapping new taxes on bourbon and other products is the European Union’s way of threatening official Washington should the White House go forward with its plan to impose tariffs on aluminum and steel.

McConnell is not only Senate majority leader but also the senior senator from Kentucky, a state known for its fabled bourbon distilleries.

McConnell left no doubt — and issued a veiled warning — Tuesday to the White House, that he sides with those in his party who fear Trump’s action could spark a global skirmish.

During a joint press conference with the Prime Minister of Sweden, President Trump reiterated his plan to implement tariffs on steel and aluminum.

“There is a lot of concern among Republican senators that this could metastasize into a larger trade war. We are urging caution,” the senator said Tuesday, his first public remarks since Trump announced his trade plans last week.

Trump’s plan for tariffs could threaten a “distilling renaissance,” his state’s bourbon makers warned.

McConnell is one of their most important champions. He controls the Senate floor and is able to schedule legislation.

The Kentucky Distillers’ Association called it “premature” to speculate on the exact effect to Kentucky’s spirits industry because much is unknown.

But association president Eric Gregory said in a statement that U.S. and EU spirits exporters have had duty-free access to each other’s markets for more than 20 years.

Any efforts to impose retaliatory tariffs, he warned, would “jeopardize this long-standing partnership, harm consumers through higher prices and more limited product availability, and significantly threaten the distilling renaissance that is creating industry jobs and generating billions in capital investment.”

Bourbon exports to the European Union totaled $154 million in 2017, up from $128 million in 2016. Total U.S. spirits exports to the EU were $789 million in 2017, according to the International Trade Commission and the Distilled Spirits Council.

“American spirits, particularly whiskeys, are the toast of the global cocktail scene,” council senior vice president for international affairs Christine LoCascio said. “International adult consumers are exploring more expensive U.S. spirits driven by their fascination with American whiskey’s heritage, as well as its mixability and versatility in cocktails.”

Jean-Claude Juncker, the head of the European Union Commission, as an apparent attempt to get the attention of McConnell, has threatened to tax several U.S. products, including bourbon. In Kentucky, the industry boasts it’s an $8.5 billion economic engine that generates as many as 17,500 jobs and $825 million in taxes.

House Speaker Paul Ryan, whose Wisconsin-based Harley-Davidson motorcycles are also an EU target, has urged the White House to take a more “surgical” approach. Interviews with other Republicans suggested they are hoping Trump switches course.

Tuesday, Trump showed no signs of changing, even appearing to encourage a trade war. He singled out the EU for being “particularly tough” on the United States.

President Donald Trump said he will impose tariffs on steel and aluminum imports in response to what he called decades of unfair trade policies. Trump summoned steel and aluminum executives to the White House and told them that next week he would

“When we’re behind every single country, trade wars aren’t so bad,” Trump said at a White House press conference, promising that his administration would impose tariffs in a “loving, loving way.”

Ryan Tuesday called Trump’s plan “too broad” and said it leaves the U.S. open to retaliatory strikes.

He said congressional Republicans have been encouraging the administration to focus only on countries, particularly China, that have been “true abusers” of U.S. trade policies. Ryan said that Rep. Kevin Brady, R-Texas, House Ways and Means Committee chairman, is talking with the White House about such matters.

Republicans have been outwardly critical of Trump’s proposal, though stopping far short of criticizing the president himself. Sen. Rand Paul, R-Ky., said he considers tariffs a tax on consumers.

“And typically Republicans, conservatives, have not been for new taxes,” Paul told Fox News.

Paul did not single out the state’s bourbon industry, but did point to the $20 billion worth of products and services Kentucky exports to international markets.

“If there’s a trade war, we stand to lose in a big way,” Paul said. “The U.S. will lose in a trade war.”

U.S. spirits set an export record of $1.63 billion in 2017, according to the Distilled Spirits Council, a 14.3 percent increase over the prior year, boosted by markets where U.S. spirits are duty free, the trade association said.

Lesley Clark: 202-383-6054, @lesleyclark