Tariffs imposed on U.S. spirits as a result of unrelated trade disputes slashed exports of Kentucky Bourbon by 35% in 2020, with shipments to the European Union tumbling by nearly 50%, the Kentucky Distillers’ Association announced Tuesday.
The situation could deteriorate further in June, when the EU expects to double tariffs on American Whiskey to 50%, KDA President Eric Gregory said. The EU had traditionally been Kentucky’s largest global market for Bourbon and whiskey, making up 56% of all exports in 2017. It’s now about 40%.
“Our signature Bourbon industry has sustained significant damage for more than two years because of a trade war that has nothing to do with whiskey,” Gregory said. “And it will get much worse if we can’t deescalate this dispute.
“We are officially asking President Biden and his administration to work with their counterparts overseas, suspend tariffs and settle these ongoing trade disputes before more long-term damage is done. A speedy resolution is in the best interest of our country and our Commonwealth.”
Congressman John Yarmuth (KY-03), Founder and Co-Chair of the bipartisan Congressional Bourbon Caucus, led efforts among members of Congress calling on the previous administration to work to end the dispute and provide certainty to Kentucky’s distilled spirits industry.
Yarmuth and his colleagues, including Bourbon Caucus Co-Chair Andy Barr (KY-06), have already begun working on a letter to incoming Biden administration trade officials reiterating the importance of resolving the dispute that they plan to send upon confirmation of U.S. Trade Representative nominee Katherine Tai.
“This is about standing up for an industry that’s vital to our Commonwealth and promoting American spirits around the world. The production, distribution, and consumption of Bourbon creates and supports thousands of good jobs in my district alone and is a key driver of our local economy,” Rep. Yarmuth said.
“Without change the Bourbon industry faces serious headwinds, so you can be sure that I will be doing all I can to work with the new Biden-Harris Administration to deescalate this unnecessary and unwanted trade dispute and bring stability to the U.S. distilled spirits export market.”
Congressman Andy Barr said, “As Co-Chair of the Bourbon Caucus, I will continue to push for the elimination of tariffs that hurt Bourbon exports and profits in Kentucky. When the United States had a shortage of hand sanitizer, Bourbon distillers stepped up on short notice to meet the demand and help save lives. Now, we need to step up and work with world leaders to support this great Kentucky and American industry to put an end to these disastrous tariffs once and for all.”
Kentucky Bourbon has been one of the world’s greatest success stories for free and fair trade, growing exports by a staggering 98% between 2010 and 2017. In that time, KDA distilleries invested billions of dollars in capital improvements to meet the growing global thirst for America’s only native spirit.
That all changed in 2018 when the U.S. imposed a 25% tariff on steel and aluminum from the EU. The EU imposed a 25% tariff on American Whiskey and other goods in response, which now has escalated into tit-for-tat tariffs on Scotch, Irish Whiskey, rum, brandy, vodka, Cognac, cordials, liqueurs and other spirits.
The damage to Kentucky Bourbon has been devastating, with export values dropping by double digits since the tariffs took effect. Figures provided by the Kentucky Cabinet for Economic Development show:
• Total exports of Kentucky Bourbon and other whiskies were valued at $455 million in 2018. That number plunged to $319 million in 2020, a 35% decrease.
• Export values to the EU have nosedived 48% since the tariffs took effect, from $257 million in 2018 to $135 million last year.
• The United Kingdom had historically been the largest market within the EU for Kentucky whiskey, making up a quarter to a third of exports. Sales have plummeted from $67 million in 2018 to just $33 million last year, a 50% drop. The largest EU export country now is Spain at $49 million.
Distilleries in 36 states exported whiskey in 2020, with Kentucky ranking second behind Tennessee. Total American Whiskey exports reported a similar downturn, declining 29% from 2018 to 2020. U.S. whiskey exports to the EU fell sharply 37% in that time and sank 53% to the U.K.
Kentucky Bourbon is one of the Commonwealth’s most historic and treasured industries, an $8.6 billion economic engine that generates more than 20,100 jobs with an annual payroll topping $1 billion each year and attracts visitors from around the world to its fabled Kentucky Bourbon Trail® tourism experiences.
“This non-stop trade war has harmed Kentucky consumers, farm families, cooperages, glass and other suppliers, and our historic, homegrown distilling industry,” Gregory said. “We are hopeful that leaders around the globe will jumpstart negotiations and bring these trade wars to an end before things get worse.
“We’ll be glad to provide the Bourbon if it helps.”