In Kentucky bourbon country, the prospect of a trade war feels like a hangover that won't go away

LAWRENCEBURG, Ky. (AP) — In the rolling hills of Kentucky where most of the world's bourbon supply is crafted, the prospect of a new trade war feels like an aching hangover that won't go away.

Kentucky bourbon producers again found themselves in the crosshairs as a target for retaliation after President Donald Trump ordered new tariffs on U.S. neighbors Canada and Mexico. On Monday, Trump and the leaders of Canada and Mexico put their planned tariffs on hold for at least a month to allow further negotiations. But the lack of a final resolution still has some elected leaders and industry officials concerned about Kentucky's iconic spirit.

American whiskey exports slumped amid an earlier trade dispute during Trump's first term.

Before the monthlong reprieve was announced late Monday, Canada, a key export market for American spirits, responded to this latest outbreak of trade warfare by initially ordering tariffs on American imports including beverages. Some authorities in several provinces had planned to remove American liquor brands from government store shelves.

The bourbon industry pumps $9 billion into the Bluegrass State's economy each year, creating more jobs and attracting more tourists than ever before, according to a study released last year. Kentucky distillers produce 95% of the global bourbon supply, according to the Kentucky Distillers' Association.

Bourbon production is part of the economic lifeblood of Lawrenceburg, a short distance from the distilleries for well-known brands Wild Turkey and Four Roses. In a place where support for Trump runs deep, some said they had faith in wielding tariffs as a way of gaining leverage in negotiations with other countries.

“I think it’s time for our nation to stand up for our nation. And that’s what we’re doing right now,” Lawrenceburg resident Gary Chilton said as he ran afternoon errands. “Other nations have taken advantage of us for so long. It’s a negotiating tool. It’ll get worked out.”

In a video posted to social media Sunday, Kentucky Democratic Gov. Andy Beshear warned that tariffs would hurt working families in a state that voted overwhelmingly for Trump last November. The pain wouldn't be limited to distilleries, but would include segments that support the industry ranging from farmers to barrel-makers, said Beshear, who is widely seen by political observers as a potential candidate for president in 2028.

Republican U.S. Rep. Andy Barr, whose district spans part of Kentucky bourbon production country, remained supportive of Trump amid the uncertainty hanging over the industry.

“Other nations have forgotten that the United States is the world’s superpower, and under President Trump’s leadership, they are quickly remembering that we will no longer be taken advantage of," Barr said in a statement Monday.

Barr said he was committed to protecting the bourbon industry, "a vital engine of jobs and economic growth.”

Republican U.S. Sen. Mitch McConnell of Kentucky, meanwhile, voiced concerns Monday about the impact tariffs would have on jobs and consumer prices in the state and beyond.

“I’m all for pushing back on predatory trade practices and leveling the playing field for American producers, but I’m not a fan of tariffs,” McConnell said in a statement. “At the end of the day, tariffs drive up the cost of the goods and services we all rely on, and American consumers pay the price.”

The bourbon industry hopes cooler heads will prevail. The Kentucky Distillers' Association commended Trump and the leaders of Mexico and Canada for suspending tariffs for 30 days. Both U.S. neighbors agreed to placate Trump by increasing efforts to boost border security and combat drug trafficking.

“We look forward to permanent agreements that will enable Kentucky bourbon to be enjoyed internationally,” Eric Gregory, the distillers' association president, said in a statement late Monday.

Chris Swonger, president and CEO of the Distilled Spirits Council of the United States, had urged the U.S. and Canada to reach an agreement that enables the spirits industries in both countries to thrive. Many producers are boxed in by the tariffs, he said.

“Some spirits are recognized as ‘distinctive products’ by the U.S. and Canada and can only be made in their designated countries, such as bourbon and Tennessee Whiskey in the U.S. and Canadian Whisky in Canada,” Swonger said in a statement. “As a result, the production of these products cannot simply be moved to another country or region.”

American whiskey producers faced headwinds even before the latest trade squabble. It comes as the industry has massive inventories of aging whiskeys that will someday reach the market. In Kentucky, a record 14.3 million barrels of bourbon were aging, the Kentucky Distillers’ Association said recently. That inventory is awaiting bottling at a time when younger adults appear to be drinking less alcohol.

The biggest threat could be looming overseas, where the European Union is set to reinstate tariffs on American whiskey at a whopping 50% rate in late March if nothing is done to head it off. Trump told reporters Sunday that import taxes will "definitely happen" with the European Union and possibly with the United Kingdom as well. The return of tariffs in the biggest export market for American whiskey would be devastating, Swonger has said.