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How the lifted tariffs will impact Kentucky’s bourbon industry

Published: Nov. 1, 2021 at 5:57 PM EDT
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LEXINGTON, Ky. (WKYT) - For years now, we’ve been reporting on the explosion of Kentucky’s bourbon industry. That included in European markets, where demand for the liquor was rising.

The Kentucky Distillers’ Association said in the 10 years before tariffs went into effect, exports had grown 98%.

That growth ended in 2018, when a 25% tariff on bourbon went into effect in the EU and United Kingdom.

“Before the tariffs, boy these are bad numbers, before the tariffs took place so we were at $454 million in exports, about $500 million. This year, through August, we were just barely at $200 million. So with 1/4 left in the year, we might make 250 by the end of the year. I would doubt it,” said Eric Gregory, president of the Kentucky Distillers’ Association.

Bourbon makers had two choices: eat the cost, which meant fewer profits, or raise prices.

“You are raising the price of your bottles by 25% and suddenly somebody over there looks and sees that the bourbon they’ve been drinking and it’s more expensive, they go back to what they were drinking before. And that’s probably scotch,” Gregory said.

The tariffs were retaliation to steel and aluminum tariffs put in place by former President Donald Trump.

Representative Andy Barr’s office said he organized a bipartisan letter with over 40 members of Congress requesting that the Biden Administration work to remove the tariffs.

Gregory said Governor Andy Beshear’s friendship with Biden’s commerce secretary helped out.

“There were many, many days where he picked up the phone and called her and helped educate her on the damage that was being done and really press them to get this done,” Gregory said.

“These things were retaliatory. They were hitting bourbon harder than anywhere else because we can’t move production offshore like other companies were gonna be able to do with other products. This is an $8.6 billion industry for us,” Gov. Beshear said.

While the tariffs will be gone, it could be a few years before they know just how much damage they did.

“Do we lose that consumer as a bourbon drinker for a year, two years? Forever? Really does have impacts, not just short-term impact, but also long-term potentially,” Gregory said.

For now, he says they’re happy to start shipping with those tariffs removed.

Those tariffs were actually set to double on Dec. 1 to 50%. Now, that won’t happen. The new deal goes into effect on the first of the new year.

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