Kentucky's bourbon industry faces uncertainty as European tariff looms over exports

LOUISVILLE, Ky. (WDRB) — Bourbon, a hallmark of Kentucky and a uniquely American product, is being used as a pawn in a larger game of global trade.

Industry leaders warn the consequences could be devastating for the Commonwealth’s iconic bourbon industry if a 50% tariff goes into effect next year.

The issue traces back to 2018, when the European Union (E.U.) imposed a 25% tax on American whiskeys in response to U.S. tariffs on imported steel and aluminum.

Eric Gregory, President of the Kentucky Distillers’ Association (KDA), explained the situation:

“In order to retaliate against the United States, several countries decided to pick on a uniquely American product, which is bourbon — only made in the United States — and we also happen to be the home of Senator Mitch McConnell,” said Gregory.

While those tariffs from 2018 have been suspended, the reprieve is temporary. On March 31, 2025, the E.U.’s retaliatory tariff of 50% is set to go into effect if no agreement is reached regarding steel and aluminum imports between the U.S. and the E.U. Such a steep tax could have catastrophic consequences for Kentucky’s bourbon producers, particularly smaller distilleries.

“So all this growth that has been happening, that we are sitting here right now about to be dumped. Everything needs a place to go,” Gregory said. “It is coming at a time when we are sitting on more bourbon than ever. A lot of it is expected to go overseas, and then you stick a 50% tax on that? It can get ugly… real fast.”

Bourbon’s popularity has surged in the past decade, and Kentucky’s distilleries, both large and small, have benefited. The Kentucky Distillers’ Association reports that the bourbon industry contributes $9 billion annually to Kentucky’s economy, supports 21,000 jobs, and pays $400 million in local and state taxes. But if the tariff returns, it could stifle growth, hurting smaller producers the most.

“If that bourbon doesn’t go overseas, you’re going to have a glut of Kentucky bourbon on the market, which may trigger a price war, and that’s going to hurt a lot of the smaller distilleries who can’t compete,” Gregory warned.

At a local liquor store, one customer said the prospect of a 50% tariff “ridiculous,” echoing broader concerns about the impact on consumers and businesses alike.

Overseas markets are critical for the bourbon industry’s growth, as 95% of the world’s bourbon is produced in the Commonwealth. Without those exports, distilleries could see their inventory pile up, leading to potential layoffs, closures, and long-term economic damage.

The situation is a stark reminder of bourbon’s deep ties to Kentucky’s economy, identity, and culture. As the March 31 deadline approaches, the industry’s future hinges on whether the U.S. and the E.U. can reach a resolution.

For now, Kentucky distilleries—large and small—are holding their breath, hoping they won’t become collateral damage in an ongoing geopolitical chess game.

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