U.S., Europe trade talks good news for Kentucky bourbon

(The Center Square) – An announcement Monday morning by the European Union and the United States to start trade discussions on steel and aluminum will have an impact on other products, including Kentucky bourbon.

The talks mean that a tariff increase on bourbon and other American whiskey exports that was scheduled to take effect on June 1 will now be delayed. That means the tariff won’t double to 50% for the time being.

Eric Gregory, president of the Kentucky Distillers’ Association, said the spirits industry welcomed the news, adding that scores of businesses “were perilously close” to suffering a devastating hit.

“This gives both sides some breathing room to return to free and fair trade and once again level the playing field for Kentucky’s signature spirit,” he said.

According to the KDA, all U.S. whiskey exports fell 29% from 2018 to 2020. The drop-off was more drastic in Europe, where shipments dropped by 37% and by 53% in Great Britain.

Of the 36 states that had distilleries exporting goods, Kentucky ranked second in the country behind only Tennessee.

Kentucky’s bourbons were hit even harder than other states. Globally, exports fell but 35% last year, according to the KDA. In Europe, it fell by nearly half, and in Britain – the state’s largest European market at one time – sales fell by 50%.

For a state that makes 95% of all bourbon produced in the U.S., the spirit is an $8.6 billion industry for Kentucky. It generates more than 20,000 jobs and $1billion in annual payroll.

And distilleries in general significantly impact the state’s economy as more than a third of the country’s distillery jobs are in the Bluegrass State.

The KDA noted those jobs come with an average salary of $95,000. That’s more than double the $46,000 annual mean salary, according to the U.S. Bureau of Labor Statistics.

That economic impact prompted two Kentucky Congressmen to write a letter last month to Katherine Tai, the U.S. Trade Representative, urged the Biden Administration to work toward trade talks that would eliminate the tariffs completely.

In statements Monday, U.S. Reps. John Yarmuth, D-Louisville, and Andy Barr, R-Lexington, both praised the news as a positive step. The two serve as co-chairs of the Congressional Bourbon Caucus.

“I hope negotiations continue and a permanent deal can be reached,” Yarmuth said in a tweet Saturday. “Tens of thousands of good Kentucky jobs rely on it.”

Gregory said he’s thankful the E.U. and U.S. will seek to reach an agreement by the end of the year.

“We look forward to getting back to zero tariffs and what we do best – crafting the finest bourbon for all the world to enjoy,” he said.

It’s uncertain what Monday’s announcement means, if anything, regarding the trade agreement between the U.S. and the U.K. and Great Britain’s tariffs on bourbons. Britain was part of the European Union when the trade issue escalated. However, the country has since left the union.

A message to the U.S. Department of Commerce was not immediately returned early Monday afternoon.

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