Brough Brothers Distillery is in the midst of a big expansion. A fifteen minutes’ drive from its small distillery in the West End neighborhood of Louisville, Kentucky, workers are toiling away on its new site, seven times the size of the old one, in the heart of Bourbon City.
This has been a long time coming for Brough Brothers, which opened its first location in 2020 and had drawn up ambitious plans for international growth in 2025. Then Donald Trump returned to power.
The Trump administration is conducting a sweeping overhaul of the US economy, using tariffs – levies on foreign goods, paid for by importers – in an effort to reset the country’s trade ties with the world, revive its industrial heartlands and force its neighbors to address illegal immigration and drug trafficking.
“Tariffs are easy, they’re fast, they’re efficient, and they bring fairness,” Trump said earlier this month.
The reality has proven more complex, and confusing, than the bold rhetoric. Threats have been leveled and then dropped; deadlines declared and delayed; tariffs imposed and postponed. Chaos reigns.
Victor Yarbrough, CEO of Brough Brothers, does not want tariffs. But he would take the certainty of tariffs over the current racket emanating from the White House around whether they will, or won’t, be imposed; when; and on which markets.
“They’re happening. They’re not happening. They’re on. They’re off. It doesn’t allow us the timeframe we need,” Yarbrough said in an interview. “We can’t plan.”
Yarbrough spoke to the Guardian the week after Trump declared there to be “no room left” for an economic peace deal with Canada; imposed sweeping 25% tariffs on US exports from the country; and accused its prime minister of using the dispute to cling to power; only to offer a one-month reprieve.
During the interview, the president lashed out against Ontario’s decision to retaliate against his tariffs with a 25% surcharge on electricity exports to the states of New York, Michigan and Minnesota, announcing that tariffs on Canada’s steel and aluminum exports to the US would be doubled. Hours later, the threat was revoked.
Brough Brothers, Kentucky’s first African American-owned distillery, was “in the middle of getting a deal done” to start selling its spirits in New Brunswick when Trump took aim at Canada, straining economic ties with a typically reliable market for US exporters. “We’ve effectively had to put the deal on hold indefinitely,” said Yarbrough.
Tensions are flaring worldwide. The day after the interview, the EU unveiled a €26bn ($28bn/£22bn) list of US targets – including bourbon – that it plans to hit with retaliatory tariffs, after Trump hiked US tariffs on steel and aluminum. In response, the US president threatened a 200% US tariff on European alcohol.
Several Canadian provinces meanwhile removed US liquor from store shelves as part of the dispute between Washington and Ottawa; a move that some American producers said was worse than a tariff. The question of how much it might cost to sell a product into a market was supplanted by whether it could be sold there at all.
“Having all US alcohol pulled from the shelves in Canada is a huge blow for the industry,” said Yarbrough, who just a few months ago had planned to start selling into markets including Canada, the UK, Germany, France and South Africa. “Now we’re Plan B.
“It’s Canada today. It’s the UK, it’s the European Union, in a couple of weeks. It’s China now. Is there another country [on which] they’re going to implement tariffs?” he said. “Can we pivot to a Brazil? Can we pivot to a Colombia? Can we pivot to a Panama? Or are they going to have tariffs the next month? It’s just difficult to facilitate any kind of plan, just because there’s so much uncertainty.”
A day after we spoke, the EU vowed to impose steep tariffs on a carefully targeted list of US exports after Trump hiked US duties on steel and aluminium. Bourbon whiskey was among them.
Yarbrough knows trade, having previously imported bourbon from the US and exported English cider while based in the UK. He knows tariffs, too. “Ultimately it’s a tax,” he said, noting that the real increase in costs is likely to be higher than the official rate, as the duty twists each link of the supply chain.
A 25% tariff, for example, would probably prompt both the importer and the retailer to adjust their costs, according to Yarbrough. “You’re not just speaking about that 25%. That’s just the baseline,” he said. “These incremental costs add up. It’s beyond just the 25%.”
The tariffs mess is rattling this deep red state. Louisville has so many bourbon production plants that locals say they can often smell the whiskey in the air. A vast bottle of Old Forester towers over the headquarters of Brown-Forman, the drinks conglomerate.
Kentucky Republicans have urged Trump to dial down his tariff threats. The Republican senator Rand Paul has warned duties would “inevitably” raise prices and invite retaliation that would reduce bourbon exports. As a stock market sell-off took hold, he wrote on social media: “When the markets tumble like this in response to tariffs, it pays to listen.”
Lobbyists insist the spirits sector is a model of the “fair and reciprocal” approach on trade that Trump claims to be seeking. In the two decades after the US and EU eliminated tariffs on most spirits in 1997, bilateral trade grew by 450%, according to the Distilled Spirits Council of the US.
“Tariffs back and forth would be catastrophic for the industry,” Chris Swonger, president and CEO of the council, told the Guardian.
Sure, he said, the US does have a trade deficit with key markets on spirits – importing more from markets like the EU, UK, Canada and Mexico than it exports to them. “But it’s not because of trade barriers. It’s because American consumers love scotch. They love Irish whiskey … American consumers love tequila, and Canadian whiskey.”
Within these global markets, however, free trade – without tariffs, or barriers – has set the stage for the US industry’s rapid growth, Swonger claimed, with the number of distilleries surging from 60 to about 3,100 in about two decades. “It’s a great American success story,” he said.
Trump, who rarely speaks in minimal terms, has conceded his grand economic reset might cause “a little disturbance” for companies and consumers. The spirits sector, so often caught in the crossfire of trade disputes, fears the turbulence may well be bigger than billed.
Operators are calling on the White House to prioritize talking over tariffs. “I get it. Two brothers are fighting,” said Yarbrough. “Let’s go have a drink and figure this out. Let’s go have a bourbon and figure this out.”