Kentucky Bourbon Industry Reels as Trump Tariffs Compound Demand Crisis

The Whiskey Industry's Whiplash

Heaven Hill Brands just opened a $200 million distillery in Bardstown, Kentucky -- even as it cuts bourbon production this year. The contradiction captures an industry caught between long-term bets and immediate pain, much of it self-inflicted by Trump's reckless tariff policies.

Kentucky makes 95% of the world's bourbon. Last year, the state's whiskey exports fell 15%, according to U.S. Census data. That's on top of a 26% drop dating back to Trump's 2018 tariffs, from which overseas demand never recovered, per research commissioned by the Kentucky Distillers' Association.

Local cooperages are drowning in backlogs of unused barrels. Some distillers are laying off workers. Yet the industry has $1.45 billion in expansion projects planned through 2030, according to University of Kentucky economist Michael Clark.

Distillers Downplay Trump's Role -- Privately, They're Terrified

Kentucky Governor Andy Beshear, a Democrat and potential 2028 presidential candidate, told Reuters that tariffs are a critical headwind. "Industry leaders complain to me in private about how these tariffs have hit them hard, how they shouldn't have to be going through it a second time," Beshear said in an exclusive interview.

But publicly, distillers are careful not to criticize Trump in a state he won by 25+ points in each of the last three elections. Heaven Hill Executive Chairman Max Shapira dismissed tariffs as "really not very impactful," blaming cyclical factors like inflation instead.

Greg Hughes, CEO of Jim Beam owner Suntory Global Spirits, echoed that line, saying inflation and falling demand -- not tariffs -- drove Jim Beam's production cuts this year. "The industry will get through this," Hughes insisted, pointing to potential growth in Latin America.

That optimism ignores the damage already done. Cultivating new markets is nearly impossible when Trump's tariff whiplash creates constant uncertainty for international buyers. His "Liberation Day" tariffs were struck down by the Supreme Court in February, but he's already imposed new worldwide tariffs and vowed to replace the old ones. Democratic governors, including Beshear, have sued, calling the new tariffs illegal.

Local Businesses Shrug, Even as Costs Rise

In Bardstown -- a bourbon-soaked town where public trash cans are fashioned from whiskey barrels -- the industry supports the local economy. "If we don't have the bourbon industry, we don't have a business," says Jeane Noland, owner of the Cozy Cottage gift shop.

Yet local entrepreneurs largely refuse to blame Trump. Susanna Buscemi, part owner of Bardstown's Volstead Bourbon Lounge, admits tariffs have increased whiskey costs but calls them "a good thing for consumers." She tries to keep politics out of her bar: "In here, we're about having a good time and drinking."

That's the power of Trump's grip on rural America -- even as his policies hammer local industries, voters and business owners won't hold him accountable.

More Pain Ahead

Trump's attacks on Iran have sent energy prices soaring, raising fears that fertilizer for corn -- bourbon's primary ingredient -- could become scarce or expensive. "We worry about getting ready to plant this year's corn crop, and are the farmers going to have enough fertilizer? And if so, at what price?" said Heaven Hill's Shapira.

Meanwhile, broader consumer trends are squeezing the industry. Rising costs of living have limited disposable income. Gen-Z consumers, either health-conscious or cash-strapped, aren't drinking as much as their parents. Weight loss drugs and cannabis drinks are chipping away at alcohol sales.

Bourbon supports 24,000 jobs in Kentucky -- nearly a third of them direct distillery roles, the rest split between suppliers and related businesses. As tariff chaos compounds cyclical headwinds, those jobs are at risk.

The industry will likely survive -- bourbon has weathered downturns before. But Trump's trade wars have made recovery harder and slower, punishing American workers and exporters to score political points. And in Kentucky, where Republicans hold super-majorities in both state legislative houses, voters seem content to let him do it again.