Kentucky Bourbon EU Exports Fell By 35% In 2020 Due To Ongoing Trade War

By Robert Ham / March 1, 2021

Exports of Kentucky bourbon took a sizable hit in 2020, in no small part due to the ongoing trade war between the U.S. and the European Union, according to a report recently released by the Kentucky Distillers’ Association (KDA). And they’re worried that it could only get worse.

Due to the 25% tariff applied by the E.U. on all bourbon and whiskey coming from the U.S., exports of Kentucky bourbon fell by 35% and shipments across the Atlantic fell by almost 50%. It’s a troubling development that the KDA fears will only grow more dire if the E.U. goes through with its plan to double tariffs on American bourbon and whisky.

Some of the whiskey barrels at Michter’s at rest (image copyright The Whiskey Wash)

“Our signature bourbon industry has sustained significant damage for more than two years because of a trade war that has nothing to do with whiskey,” KDA president Eric Gregory said, in a prepared statement. “And it will get much worse if we can’t deescalate this dispute. We are officially asking President Biden and his administration to work with their counterparts overseas, suspend tariffs and settle these ongoing trade disputes before more long-term damage is done. A speedy resolution is in the best interest of our country and our Commonwealth.”

Until 2018, Kentucky bourbon and whiskey made up over half of the exports to the European Union. But when the U.S. imposed tariffs on steel and aluminum from the E.U., the response was a 25% tariff on American whiskey and other goods. The back and forth trade war has since grown to include multiple spirits that caused serious economic damage to distilleries and distributors on both sides of the Atlantic.

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According to the Kentucky Cabinet for Economic Development, the numbers from Kentucky alone bear this out. The value of whiskey exports in 2020 fell to $319 million—a 35% decrease from a 2018 high of $455 million. And export values to the E.U. dropped 48% as a result of the tariffs, from $257 million to $135 million last year.

The pinch is being felt nationwide. Exports of American whiskey to the E.U. reportedly fell by 37% and by 53% to the U.K. from 2018 to 2020. And exports worldwide saw a 29% decline overall.

There is hope that the newly elected Biden administration will work to remove these tariffs and end these trade disputes. The members of the Congressional Bourbon Caucus are already drafting a letter that they plan to send to incoming U.S. Trade Representative Katherine Tai once she is confirmed by the Senate.

“This is about standing up for an industry that’s vital to our Commonwealth and promoting American spirits around the world,” Bourbon Caucus co-chair and representative from Kentucky’s third Congressional district John Yarmuth said, in a prepared statement. “The production, distribution, and consumption of bourbon creates and supports thousands of good jobs in my district alone and is a key driver of our local economy. Without change the bourbon industry faces serious headwinds, so you can be sure that I will be doing all I can to work with the new Biden-Harris Administration to de-escalate this unnecessary and unwanted trade dispute and bring stability to the U.S. distilled spirits export market.”