LEXINGTON, Ky. — Distillers throughout Kentucky and the country are cheering the end of a long tariff nightmare placed on American whiskey exports.

What You Need To Know

  • Retaliatory tariffs imposed in 2018

  • Kentucky's exports to EU countries and the United Kingdom were cut in half

  • Distilleries had a record year of production in 2020

  • Before the tariffs, Kentucky bourbon exports increased by 98% between 2010 and 2017

Retaliatory tariffs and ongoing trade wars posed severe threats to global exports. The European Union (EU) imposed a 25% tariff on American whiskey and other goods in 2018 in response to a U.S. tariff on steel and aluminum imposed by the Trump Administration. As a result, Kentucky bourbon exports to the EU and the United Kingdom (UK) — the state’s largest whiskey export market — were cut in half, according to data from the Kentucky Cabinet for Economic Development.

While the tariffs were still imposed, Kentucky distilleries produced a record amount of bourbon in 2020, and even with an 8% increase in domestic sales, a record 10.5 million barrels were aging in warehouses across the Commonwealth.

“We toast the Biden Administration for its resolve in bringing a stop to these punitive tariffs on American whiskeys and securing the return to duty-free trade in spirits across the Atlantic,” said Chris Swonger, president and CEO of the Distilled Spirits Council. “With the removal of the UK’s debilitating retaliatory tariffs on American whiskey exports, U.S. distillers are ready to fire up the stills and resume sharing the special taste, heritage and quality of America’s native spirit with our UK consumers.”

In a news release, Swonger said the Biden Administration made it a priority to reset the relationship with the EU and UK, which are two of the country’s more important allies and trading partners, and the trade disputes saddled distilled spirits on both sides of the Atlantic.

“We also appreciate the longstanding support from the U.S. Department of Agriculture for highlighting the negative impact retaliatory tariffs have on value-added agriculture exports, including distilled spirits,” Swonger said. “American Whiskey producers have a close relationship with their farmer partners who are also hailing an end to these devastating tariffs.”

According to the Kentucky Distillers Association, posing the 25% retaliatory tariff on American whiskeys in 2018, exports to the UK, the U.S.’s fourth-largest market, declined by 42%, from $150 million to $88 million in 2021.

The U.S. and the EU announced an agreement in October 2021 to suspend for two years the retaliatory tariff on American whiskeys in the steel-aluminum dispute. The U.S. reached separate agreements in June 2021 with the EU and UK in the World Trade Organization’s Boeing-Airbus disputes to suspend tariffs for five years on U.S. rum, brandy and vodka, single malt scotch, single malt Irish whiskey from Northern Ireland, liqueurs and cordials from the UK, Germany, Ireland, Italy and Spain, and certain cognacs and other grape brandies from France and Germany.

Kentucky Agriculture Commissioner Dr. Ryan Quarles praised the agreement and recently returned from the UK where he met with several officials, including Secretary of State for International Trade and President of the Board of Trade Anne-Marie Trevelyan and Secretary of State for Environment, Food and Rural Affairs George Eustice. He said he directly advocated for the end of bourbon tariffs while in the UK.

“The end of these tariffs was an issue I raised during my recent trade mission to the UK,” Quarles said in a release to Spectrum News 1. “As agriculture commissioner, an essential responsibility of mine is advocating for Kentucky agriculture and farm families. These tariffs were hurting the bourbon industry and those farm families that provide the agriculture necessities for the industry.”  

Perhaps no place felt the financial brunt of the tariffs more than Kentucky, which is home to 95% of the global bourbon industry and responsible for $9 billion in annual economic output. The bourbon industry in Kentucky creates as estimated 22,500 jobs with a $1.23 billion annual payroll. More than 75% of corn used by the Kentucky Distillers’ Association members comes from Kentucky farms.

Before the tariffs, Kentucky bourbon exports increased by 98% between 2010 and 2017. The tariffs imposed on U.S. spirits decreased exports of Kentucky bourbon by 35% in 2020, with shipments to the EU decreasing by nearly 50%, according to the Kentucky Distillers’ Association (KDA).

KDA President Eric Gregory said the tariffs created a “four-year dry spell.”

“It’s time to raise a toast,” he said. The KDA and its 50 member companies congratulate trade negotiators on reaching a deal to drop retaliatory tariffs on Kentucky bourbon and American whiskey. The tariffs reversed what had been tremendous growth in Kentucky bourbon exports to the U.K., costing distillers, industry partners and farm families hundreds of millions of dollars.” 

Gregory noted that Kentucky distillers also are in the middle of a 10-year, $5.2 billion building spree to meet the growing global demand for bourbon. In the next four years, the Bluegrass State’s distilleries expect to invest $3.3 billion in new facilities and expansions of existing operations, he said. 

“The KDA thanks the Biden Administration’s steadfast leadership, including direct negotiations by U.S. Secretary of Commerce Gina Raimondo. As well, the KDA recognizes and appreciates the critical roles of U.S. Senate Minority Leader Mitch McConnell, Kentucky Gov. Andy Beshear, Congressman John Yarmuth and the rest of the Kentucky delegation for working to resolve this years-long trade dispute and to restore fairness in the UK’s market for Kentucky’s signature distilled spirits industry. With the suspension of these tariffs, we look forward to rekindling bourbon enthusiasm in the UK and helping our legendary distillers further share the finest bourbon for all the world to enjoy.”

The tariffs officially end June 1.