Kentucky Distillers’ Association Sounds Alarm Over ‘Triple Threat’ of Tariffs, Taxes and Slowing Sales

The Kentucky Distillers’ Association sounded the alarm bells over tariffs and a potential trade war. (Photo: Ikon Images via AP Images)

The Kentucky Distillers’ Association shared a news release sounding the alarm about the “looming return” of tariffs, high taxes and shifting consumer demand threatening the state of the Kentucky bourbon industry.

The organization seemed particularly concerned about the return of tariffs at an astonishing 50%, which the European Union is supposed to reimpose in March 2025.

“Bourbon continues to drive Kentucky’s economy as our homegrown industry is generating more jobs, more payroll, more tax revenue, more tourists and more distilleries in more countries than ever before,” President of the Kentucky Distillers’ Association Eric Gregory said in a news release. “But we are up against a triple threat of back-breaking tariffs, snowballing taxes and shifts in consumer trends that have slowed sales. If tariffs targeting American Whiskey are levied, distillery workers, farmers, truckers, coopers, hospitality staff and entire industries dependent on Bourbon will suffer.”

This ominous statement was made after Kentucky Bourbon experienced a year of unprecedented growth, with a record number of 14.3 million bourbon barrels aging in rickhouses. The organization reported that production is up 600% since 2000, and according to tax assessors, the value of all bourbon barrels clocks in at $8 billion.

Yet, distilleries do have a right to be concerned. The Kentucky Bourbon Tax charges distillers a form of “property tax” typically costing $200 per barrel. Those in favor of the tax claim the money pays for schools, EMS services and infrastructure in Kentucky, yet many distilleries find the funds astronomically high.

In July, Kentucky distilleries breathed a sigh of relief at the news that the bill would be phased out by 2043. Yet other Kentuckians were not so thrilled.

“This is a tax cut for a booming industry,” Republican Rep. Candy Massaroni of Bardstown said. “And ultimately, this is going to put more of a tax burden upon my constituents.”

Taxes aside, tariffs are a very real concern, and the looming anxiety about a trade war since the re-election of President Donald Trump has distilleries and countries all over the world concerned.

On Monday, Ontario Premier Doug Ford threatened a ban on American alcohol in the highly populated province. He additionally threatened to restrict exports of electricity to states like Michigan New York and Minnesota.

“We’ll use every tool in our toolbox, as we put a tariff on bourbon last time,” Ford said in a press conference. “The LCBO is one of the largest purchasers of alcohol in the entire world. But I’d prefer not to do any of this.”

Mexico’s tequila industry also could face a negative impact from potential tariffs, and in November, the President-Elect claimed he would impose a 25% tariff on Mexican goods, leaving Mexican officials in a difficult position.

“If you put 25% tariffs on me, I have to react with tariffs,” Mexico’s Economy Minister Marcelo Ebrard expressed. “If you apply tariffs, we’ll have to apply tariffs. And what does that bring you? A gigantic cost for the North American economy.”

As for the Bourbon world, members of the KDA have expressed concerns about how potential tariffs would impact the economy and cost many Americans their jobs.

“As the Worldwide Voice of Bourbon, it’s the KDA’s job to make sure decision-makers across the globe understand the far-reaching impact of the Bourbon economy and how American jobs would be lost if we continue to get dragged into unrelated trade wars,” Gregory concluded.