Kentucky’s bourbon industry could find itself in the middle of a potential trade war between the United States and the European Union.
President Donald Trump wants to protect U.S. steel, which could include placing high tariffs on steel imports from China and Germany. In response, the European Union shot back. EU Commission president Jean-Claude Juncker said he would be ready within days to retaliate by placing high tariffs on American agricultural exports — and he specifically called out Kentucky Bourbon.
If this comes to fruition, what effect could it have on Kentucky’s bourbon industry?
The European Union is a major bourbon customer. Data from the Distilled Spirits Council of the United States shows that about 59 percent of the country’s bourbon exports went to EU member countries last year.
“Over the past 10 to 15 years, export markets have become increasingly important,” says Eric Gregory, president of the Kentucky Distillers’ Association.
“Anything, not just trade, but anything that impacts Kentucky bourbon affects a lot of different spin-off industries, just as anything that would impact the automobile industry, would impact a lot of different spin-off industries,” he says.
According to the Distillers’ Association, the Kentucky bourbon industry employs more than 17,000 people and had an estimated economic impact of about $8.5 billion in 2015.
But the trade war hasn’t happened yet, and leaders at the G20 summit are hoping to persuade President Trump to change his mind on steel.
If he goes ahead with potential tariffs, it could end up having a a divisive effect on U.S. Republicans. Many of Trump’s supporters, and some key Congressional leaders like Senate Majority Leader Mitch McConnell are from red states dependent on agriculture and farming that could be affected by tariffs.