LEXINGTON, Ky. (LEX 18) — Senators Rand Paul and Mitch McConnell wrote U.S. Trade Representative Ambassador Katherine Tai requesting an agreement with the European Union that would remove retaliatory tariffs on spirits and wines. Creator and COO of "The Bourbon Flight" Jake Kratzenberg follows industry trends closely and shares what this could mean for the bluegrass.
He says, "It affects Kentucky on the fact that it's $560 million worth of exports that just come from Kentucky."
Efforts have been made to pause these tariffs — for five years for spirits and wines and two years for American whiskeys. A report released earlier this year by the Distilled Spirits Council of the United States shows how exports declined because of the tariffs and rose again after a lift. In 2022, 44 states exported distilled spirits and Kentucky was the second-highest exporter.
Kratzenberg says, "The larger distilleries like Sazerac or Jim Beam, they may be okay, but it is the smaller distilleries like the Whiskey Thief or even the Castle and Key that will be hurt because a lot of their exports and you know a lot of their production goes over there."
The senators’ letter explains that under tariffs American whiskey exports dropped 20% between 2018 and 2021.
It also explains that at the beginning of 2024, a 50% tariff is set to hit the American whiskey industry. All bourbon is whiskey, but not all whiskey is bourbon. In Kentucky, bourbon is a $9 billion industry generating more than 22,000 jobs, according to the Kentucky Distillers Association. Raising tariffs could impact the industry's global brand.
"Bourbon is the only native spirit of America. It was passed by Congress back in the 60s. And with...if you think about America, you think of American football, you think of bourbon, you think of cowboys, you know, and that's something around the world that people know us from — the United States but they also know Kentucky,” says Kratzenberg.
Senator Steven West represents Kentucky’s 27th state district, including areas that are home to several distilleries. In a statement, he says in part, "These distilleries make products that have a global demand and employ local residents. Whether at the state level in the Kentucky General Assembly or the federal level in Congress, I hope to see continued support for Kentucky’s rich bourbon and spirits industry."Kratzenberg says, "We have to work together, come together as a whiskey community, a bourbon community and talk to our legislators to say, 'Hey, this is not what we want. You know we want zero tariff back and forth on this,' and hopefully it goes...if it's not just on whiskey, it’s on other things. It's just diplomacy."
