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In the heart of Kentucky's bourbon country, the threat of a new trade war is causing concern among bourbon producers. President Donald Trump's decision to impose tariffs on U.S. neighbors Canada and Mexico has once again put Kentucky bourbon in the crosshairs of retaliatory measures.
Following negotiations between Trump and Mexican President Claudia Sheinbaum, planned tariffs have been put on hold for a month. However, Canada has already responded by imposing tariffs on American imports, including beverages, affecting key export markets for American spirits.
The Kentucky bourbon industry, which contributes $9 billion annually to the state's economy and produces 95% of the global bourbon supply, is bracing for the impact. Governor Andy Beshear warned that tariffs will not only hurt distilleries but also affect farmers, bottling plants, and cooperages, emphasizing the broader impact on working families in the state.
Despite the uncertainty, Republican U.S. Rep. Andy Barr expressed support for Trump's stance, emphasizing the need to protect the bourbon industry as a vital economic engine for the state. The Distilled Spirits Council of the United States also called for a resolution to enable the spirits industries in both countries to thrive.
However, the industry faces challenges beyond the trade dispute, including an oversupply of aging whiskeys and changing consumption patterns among younger adults. The looming threat of the European Union reinstating tariffs on American whiskey at a 50% rate in late March poses a significant risk to the industry's biggest export market.
As discussions continue on the trade front, stakeholders in the Kentucky bourbon industry are hopeful for a resolution that safeguards their economic interests and ensures the industry's continued growth and success.