Would retaliatory bourbon tariffs hurt signature Ky. industry?

LEXINGTON, Ky. (AP/WKYT) - The threat of retaliatory European tariffs against one of Kentucky's signature industries - bourbon - has experts and insiders waiting to see what happens.

European leaders have vowed to fight back against any of President Trump's proposed tariffs by imposing some of their own on American-made classics including Kentucky bourbon.

"Europe has to fight back against this, and we will fight back against this," European Commission chief Jean-Claude Juncker said on Friday evening. "So now we will also impose import tariffs. This is basically a stupid process, the fact that we have to do this. But we have to do it. We are now imposing tariffs on motorcycles, Harley Davidson, on blue jeans, Levis, on Bourbon. We can also do stupid."

Juncker said that he had "warned" President Donald Trump against the move at the G20, and that he would have preferred not having to retaliate, but that the EU had to "fight back" and could "also do stupid."

Bourbon experts said it is still too soon to know exactly what might happen and how tariffs could impact the bourbon business, but they said the international market is important to the industry's growth.

"There is a lot on the line," said Justin Thompson, co-owner of Justins' House of Bourbon in Lexington and The Bourbon Review magazine. "I believe folks hope it's more bark than bite, just a negotiation tactic. There is a lot of bourbon being made, and a lot of it is earmarked for foreign markets, so what happens in Europe and other places is very important to the bourbon industry.

"A lot of companies have expanded their warehouse capacity and production capacity, and a lot of that's in hopes of it not only growing here domestically in the United States and outside of Kentucky, but definitely for the foreign markets," Thompson said.

Eric Gregory, the president of the Kentucky Distillers' Association, said in a statement that he will not speculate until he knows specific trade policies, but he said that spirits exporters in the U.S. and the E.U. have enjoyed duty-free access to each other's markets for more than two decades.

"Any efforts to impose retaliatory tariffs on U.S. spirits exports to the EU will 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," Gregory said in the statement.

Bourbon is an $8.5 billion industry that accounts for as many as 17,500 jobs and creates $825 million in tax revenue every year, according to statistics from the Distillers' Association. Kentucky makes 95 percent of the world's bourbon supply. Bourbon is America's only native spirit.

The World Trade Organization has warned that President Donald Trump is risking an economically damaging trade war if he goes ahead with plans to impose punishing tariffs on steel and aluminum imports, as he declared on Thursday.

Trump didn't appear too concerned about the prospect of a trade war, even with a key partner such as the European Union. In a tweet early Friday, he said "when a country (USA) is losing many billions of dollars on trade with virtually every country it does business with, trade wars are good, and easy to win."


Full statement from Kentucky Distillers' Association President Eric Gregory

"As we've seen this morning, many aspects of the President's proposed trade policies are not yet known or are still evolving, including whether tariffs would exempt certain trading partners. Therefore, it's premature to speculate on the specific impact to Kentucky's signature Bourbon and distilled spirits industry until the facts are clear.

"Bourbon is one of the Commonwealth's most historic and treasured industries, a booming $8.5 billion economic engine that generates as many as 17,500 jobs with an annual payroll topping $800 million, pours $825 million into tax coffers each year, and drives tourism through the KDA's famous Kentucky Bourbon Trail® adventures.

"U.S. and EU spirits exporters have enjoyed duty-free access to each other's markets for more than two decades, which has greatly benefited both spirits producers and consumers, and has resulted in increased exports, jobs and consumer choice.

"Any efforts to impose retaliatory tariffs on U.S. spirits exports to the EU will 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."



 
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