Kentucky Bourbon Industry Caught in the Crosshairs of Trade War

Bourbon Industry Caught in the Crosshairs of Trade War

Distilleries in Kentucky, the heart of America's bourbon industry, are facing the brunt of a brewing trade war between the U.S. and Canada. In retaliation for tariffs placed on its products by the Trump administration, Canadian liquor stores have removed American-made alcohol from their shelves. This has led to canceled shipment orders and stalled liquor agreements for Kentucky bourbon businesses.

Michter's Distillery in Louisville, a family-owned business, has already lost $115,000 due to canceled bourbon shipment orders to Canada, its largest foreign market. "That's the reality of it," said Andrea Wilson, chief operating officer of Michter's. "We would prefer to see less tariffs than more."

The trade war escalated when President Trump announced a 25% tariff on goods imported from Canada and Mexico, two of the country's largest trade partners. He later doubled the tariffs imposed on steel and aluminum imported from Canada. This move came after Ontario's premier announced a 25% increase in electricity charges for 1.5 million Americans.

Kentucky's bourbon industry contributes about $9 billion to the local economy annually and produces about 95% of the bourbon sold worldwide. While consumers likely won't see a price increase on bourbon for a few months, Kentucky distilleries could feel an immediate pinch due to canceled shipments to Canada.

Black-owned Brough Brothers Distillery in Louisville was in the midst of negotiating to sell its products in Canada for the first time when the trade war started. The deal fell through, and CEO Victor Yarbrough is now considering sending his products to South Africa or Brazil.

Fawn Weaver, founder of Black-owned Tennessee whiskey brand Uncle Nearest, had her alcohol products pulled off the shelves in Canada. She contends that the tariffs mean her business can't be as aggressive in the global market for now. "As an independent brand, I can't afford those tariffs," she said. "I can't afford to absorb it, and I can't pass it on to the consumers."

The trade war has created uncertainty for Kentucky's bourbon industry, with businesses facing potential losses and stalled growth. The industry is hoping for a resolution to the trade war to ensure its continued success and contribution to the local economy.