In Louisville, Kentucky, the owners of Brough Brothers Distillery eagerly awaited the opening of their new distillery to initiate plans for expanding whiskey production to enter international markets like Canada and Europe. However, their strategies have hit a roadblock due to the fluctuating threat of tariffs.
Victor Yarbrough, CEO of the Black-owned distillery, shared that the company’s Brough Brothers Distillery’s plans to establish itself in Canada, as well as in Germany and France, have been placed on hold. The increasing global popularity of American whiskey is now tangled in a complex web of trade disputes sparked by former President Donald Trump.
Yarbrough expressed frustration, as he and his brothers, Bryson and Chris, view themselves as unintended casualties of these political decisions. In an industry eager to appeal to a diverse political audience, discussing politics is often as taboo as Prohibition itself. Alongside tariff uncertainty, American businesses like Brough Brothers face public relations challenges linked to Trump’s “America First” policies.
The trade disputes have escalated tensions, resulting in actions such as Canadian hockey fans booing the U.S. national anthem and liquor stores pulling American spirits from shelves. Many companies, including Brough Brothers, are anxiously monitoring these developments.
As construction progresses on their new distillery near the Ohio River, Yarbrough believes that mending business relationships through public relations and media outreach will be crucial once the trade tensions subside. Prior to the trade war, Yarbrough hoped to launch his bourbon in regions like New Brunswick, with further expansion across Canada in the cards.
This immediate threat hovers over the U.S. whiskey industry, which celebrates global enthusiasm for bourbon and Tennessee whiskey. Kentucky’s Democratic Governor Andy Beshear criticized Trump’s unpredictable tariff strategy for destabilizing the American economy and potentially raising consumer prices.
Recently, Trump temporarily delayed 25% tariffs on certain Canadian imports for a month to avert broader trade war impacts. Nevertheless, Brough Brothers’ expansion plans remain uncertain. Yarbrough noted that this brief suspension does little to resolve long-term planning issues for his company or others in the industry.
Kentucky, responsible for 95% of the world’s bourbon supply, feels the stakes acutely. Even postponing tariffs can’t resolve logistical challenges for whiskey producers whose operations depend on meticulous future planning. According to Judy Hollis Jones, president and CEO of Buzzard’s Roost, the uncertainty hampers strategic decision-making.
The Kentucky Distillers’ Association likens the current trade conflicts to a recurring nightmare, having repeatedly cautioned against tariffs and their retaliatory effects on the spirits industry. Beyond North American disputes, the European Union plans to reintroduce a tariff on American whiskey by April 1 unless diplomatic resolutions are reached.
This trans-Atlantic situation echoes previous battles over Trump’s tariffs on European steel and aluminum, leading to a retaliatory tariff that cut American whiskey exports to the EU by 20%, inflicting over $100 million in losses from 2018 to 2021. After a suspension in tariffs, American distillers experienced a recovery in EU sales.
With Europe’s love for American spirits at risk, the looming 50% tariff could cause significant damage across the industry. Chris Swonger, CEO of the Distilled Spirits Council, highlighted the dire potential consequences for both large and small distillers.
For large producers, the capacity to weather such disruptions exists, but smaller players lack those resources. For example, Canada represents just a fraction of Brown-Forman Corp.’s global sales, but company CEO Lawson Whiting noted that some Canadian provinces have preemptively removed American products from their shelves, a move viewed as even more damaging than tariffs alone.
Small distillers like Brough Brothers are exploring alternative strategies, potentially focusing more heavily on domestic sales or other international markets, but remain trapped in uncertainty. Yarbrough expressed his frustration, noting how challenging it becomes to navigate this landscape.
In a similar vein, Tom Bard, co-owner of The Bard Distillery in western Kentucky, fears his painstaking efforts to enter the Canadian market could be undone by this trade dispute. His distillery had successfully expanded into British Columbia and Alberta, and further growth depended heavily on resolving this trade confrontation.
Bard emphasized the financial impact, as the Canadian market was expected to constitute a significant portion of his sales. As a result, the distillery invested significantly in scaling operations to meet international demand but now faces a dilemma of potentially accumulating excess inventory.
For American spirits to resume their northward journey, Bard concluded, a resolution to the trade dispute is a prerequisite. In the meantime, ramping up domestic distribution may offer some relief to offset stalled sales in Canada.
Despite these hurdles, Bard remains optimistic about adapting to these challenges as a small business owner. The desire for smoother operations without such obstacles remains strong among American distillers.
