By Bruce Schreiner and Dylan Rovan
LOUISVILLE, Ky. (AP) — With a new distillery set up to open soon, the manufacturer of Kentucky’s Broughs Bourbon was ready to implement its business plan. They were trying to bolster whiskey production to infiltrate favourable new markets in Canada and Europe.
Currently, unaddressed threats from tariffs are destroying these plans.
As with plans to invade Germany and France, efforts by black-owned stills to gain foothold in Canada are pending, said Victor Yarbrough, CEO of the Brough Brothers Distillery. That’s because he was caught up in the crossfire of a trade dispute incited by President Donald Trump, which engulfed the global appeal of the iconic American spirit.
“It’s very frustrating,” said Yarbra, who started the Louisville Distillation Company with his brothers Bryson and Chris. “We are secondary damage.”
For distilleries trying to sell to all political striped consumers, talking about politics is as disliked as arguing about bans. But in addition to uncertainty about tariffs and tariffs, bourbon manufacturers and other US companies seeking to do business in Canada still face public relations challenges reverberating from the president’s dull Force’s “America-first” approach to international relations.
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Canadian hockey fans booing US anthems and liquor stores north of the border, removing the American spirit from the shelf even before tariffs become clear.
In a building that has been converted into a new distillery near the Ohio River, Drywalldust covers the floor of the project, where the brothers raise the company’s profile in a world of ultra-competitive bourbon.
Yalbura, who had hoped to introduce bourbon in New Brunswick before the trade war broke out and then expand to Ontario and other parts of Canada, said: “So I think that kind of media blitz, PR blitz definitely has to be done.”
The growing market is being hampered by uncertainty
The trade war poses an immediate threat to American-made success stories based on the growth of global tastes for bourbon, Tennessee whiskey and other products.
Kentucky Democratic government Andy Besher said the president’s zigzagging tariff policies have been damaging the US economy, leading to rising consumer prices while disrupting businesses.
“We’ll not only impose tariffs, but we might do that to you anytime,” said Beshear, a potential presidential candidate for 2028.
Trump on Thursday postponed a 25% tariff on several imports from Canada for a month amid concerns over economic radioactive effects from the broader trade war. Yarbrough said his company’s expansion plans are still in scope.
“It won’t change our situation,” he said. “Just as it has turned into a reprieve, it may change as quickly as next month as we’ve returned.”
For an industry that needs to plan well for the future based on the aging of whiskey products, this anxiety is spreading in Kentucky, generating 95% of the global bourbon supply. At this point, even tariff delays do not alleviate the practical problems our whiskey makers face.
“The problem for us is the long-term plan, and postponements are nothing to do with the long-term plan.
“I tend to like certainty, although other people may adapt more easily than I do,” Jones said.
The Kentucky Distilled Spirit Association says the latest trade dispute feels like Deja Vu. Industry groups have long sounded warnings that tariffs and retaliatory taxation will wreaking havoc for the spirit industry. In addition to the North American trade dispute, the European Union plans to revive tariffs on American whiskey by April 1.
That transatlantic conflict is a re-enactment of Trump’s first tariffs on European steel and aluminum. EU retaliation tariffs caused 20% to be dropped due to US whiskey exports, bringing distilled spirits with revenues of over $100 million from 2018 to 2021. Once tariffs were suspended, EU sales recovered for American stills.
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The threat of “irreparable harm” to distillers
Now, European enthusiasm for Kentucky Bourbon and other US spirits is “threatened by a potential 50% tariff, double tax, that will irreparably harm distillers, large and small.
Customs duties are equivalent to taxes. This risks whiskey producers will either absorb into a decline in profits or pass it to their customers at a higher price, losing market share in a competitive market. In 2024, the EU was by far the largest export market for the US distillation spirit, followed by Canada, the council said.
Trump argues that open trades cost jobs at millions of US factories and tariffs are the path to American-made prosperity.
Large stills have capital and market reach to survive the chaos caused by tariffs.
Canada accounts for just 1% of total revenue from Brown Forman Corporation, the maker of Jack Daniel’s Tennessee whiskey, and the Louisville-based company has been able to withstand the chaos there, CEO Lawson Whiting said.
But Whiting said the decision to steal American products from Canadian provincial shelves was “worst than tariffs because it’s literally taking away your sales.” He called it “a very unbalanced response to the 25% tariff.”
The threat of a long-term trade war has brothers exploring other options. They can lean wildly towards domestic sales or look for other markets overseas, but again, planning is difficult.
“Talking about this is beginning to hurt my head,” Yabra said.
For another Kentucky craft still Tom Bird, there is a risk that all his efforts to gain foothold in Canada could evaporate due to cross-border trade disputes.
Byrd and his wife, Kim, own Bird Distillery in Moulenburg County, western Kentucky. Their products had permeated British Columbia and Alberta, but a new purchase order north of the border is pending amid Trump’s ever-changing trade war.
“That hurts,” Bird said. “For a small distillery like us, every pallet that comes out the door makes a big difference. That’s a big deal for us.”
Byrd said his team invested heavily in getting into Canada. There, they hoped the business would grow rapidly and account for at least 25% of the overall sales this year.
“We want to ship as many as we can to Canada,” Byrd said. “We’ve expanded our distilleries to take advantage of all the global demand for our products. What we hate is that if we get this equipment online this year, we’re afraid we’ll clean up our inventory without knowing what will happen, so we can’t do full throttle.”
He said the dispute needs to be resolved before Canadian distributors risk accepting shipments of the American spirit.
Bird plans to increase distribution in the country to try to make up for losses in sales in Canada.
“We’re Americans in small business so we’re going to make it work,” he said. “But it’s good that you don’t have these obstacles.”
Associated Press Writer Paul Harov from New York contributed to the report.
Original issue: March 11, 2025, 1:51pm EDT
