Politics & Government

Bevin: Trump is right, McConnell is wrong and Kentucky bourbon will be fine

Gov. Matt Bevin, on CNBC's "Squawk Box," called the 25 percent European tariff on Kentucky bourbon that will take effect on Friday "a money grab" but dismissed its potential to hurt one of the state's signature industries.
Gov. Matt Bevin, on CNBC's "Squawk Box," called the 25 percent European tariff on Kentucky bourbon that will take effect on Friday "a money grab" but dismissed its potential to hurt one of the state's signature industries.

Gov. Matt Bevin called a 25 percent tariff, which kicks in Friday on Kentucky bourbon exports to Europe, "a money grab" that won't hurt distillers, contradicting what U.S. Senate Majority Leader Mitch McConnell has said on the topic.

In an interview Thursday with CNBC's "Squawk Box," Bevin said that while "there is the potential for disruption in the marketplace," President Trump is on the right track.

"The president is correct," Bevin said, the U.S. runs a $12 billion to $15 billion monthly deficit with Europe.

And Europe will lose more from a trade war than Kentucky will, he said.

Bevin was in Washington attending a Commerce Department foreign investment summit and was one of eight governors who met at the White House for a working lunch with Trump and vice president Mike Pence. Bevin spent Wednesday at appearances before conservative think tanks in the capital city. His time in Washington comes as he's been quiet about whether he will seek a second term in 2019, prompting speculation he's interested in a second bid against McConnell — or that he's hoping for a Trump administration gig.

Bevin repeatedly dismissed the effect of tarrifs on the state's bourbon industry, which has been expanding rapidly in the last few years and is now an $8.5 billion business, with about $180 million in exports to Europe.

"Europeans are still going to drink more bourbon this year than they did last year; they're just going to pay more for it because their government's going to take some of it," Bevin said Thursday.

In an interview with Bloomberg on Wednesday, Bevin said he didn't think there would be "tremendous impact" from the European tariffs, which join those imposed by China and Mexico, with Canada coming soon, too.

"People love bourbon," Bevin said. "The EU is straight up doing this to raise money. They are taking bourbon is very popular, it's only produced in Kentucky. The reality is 95 percent of the world's bourbon and 95 percent of the bourbon worth drinking, is made in Kentucky so they're not protecting the European bourbon market."

By law, bourbon can only be produced in the United States, just as Scotch can only be produced in Scotland.

"I don't see that this will have long-term trade implications ... especially as it relates to bourbon. People in Europe still love bourbon and they're going to still buy it," Bevin said.

In a speech in Louisville earlier this month, McConnell warned that a trade war prompted by Trump's protectionist tariffs on steel and aluminum "will not be good for the economy."

McConnell told Greater Louisville Inc. that he had counseled Trump to avoid the dispute, which could impact bourbon as well as farm commodities and Kentucky's automotive industry.

On Thursday, the Kentucky Distillers' Association echoed McConnell's warning, saying the group, which includes major distillers such as Jack Daniel's parent Brown-Forman and Jim Beam parent Beam Suntory, believes the tariffs and retaliatory measures "will have a significant impact on bourbon investment, employment and economic growth throughout the commonwealth."

"As a uniquely American product, bourbon and distilled spirits accounted for more than $450 million in Kentucky exports worldwide in 2017, a 23 percent increase over the previous year. Of that, nearly $200 million was exported to EU countries, which has been growing at a rate topping 10 percent annually over the last five years," said KDA president Eric Gregory. “An extended trade war would not only harm our iconic industry, but also Kentucky’s farm families, cooperages, glass and other suppliers, hospitality and tourism partners, and ultimately, our loyal consumers through higher prices and limited availability."

Woodford Reserve got a multimillion-dollar expansion in 2014, when the company opened at least four 55,000-barrel warehouses in Woodford County on the hill overlooking the historic distillery.

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