At Brough Brothers Distillery in west Louisville, water boils on a gas stove, filling the room with noise.
Victor Yarbrough, alongside his brothers Christian and Bryson, opened the first Black-owned distillery in Kentucky.
They were looking to expand business into Canada, but that plan was dashed last week after President Donald Trump placed a 25% tariff on Canada and Mexico.
Canadian officials quickly responded with tariffs of their own and directives to pull U.S.-made alcohol off the shelves in the province-run liquor stores.
Yarbrough was in talks to get his liquor onto shelves in New Brunswick. Last week Yarbrough reached out to his contacts there, after hearing U.S. alcohol was being banned in several provinces.
“The response was, yes, they've had a directive from the government, saying, ‘Look, don't take any alcohol.’ So we've effectively had that deal suspended indefinitely,” he said.
Yarbrough said more than anything, the back and forth between the U.S. and other countries is the most worrisome part of a trade war.
“For us, it's about the uncertainty,” Yarbrough said. “So whether we have tariffs or whether we don't have tariffs, that's fine either way. The uncertainty is really what's harming us right now.”
And now starting April 1, the American whiskey industry is likely to get hit with 50% tariffs from the European Union. They are in response to U.S. tariffs of 25% on steel and aluminum. Trump has since threatened a retaliatory tariff of 200% on alcohol from the EU.
“It just makes it extremely difficult to do any business. But you know, ultimately, we'll see if there's some type of negotiations to take place,” Yarbrough said.
He remembers tariffs of 25% on bourbon during Trump’s first administration. He worked in liquor imports at the time and said they were able to absorb the cost for a while, but that eventually became unsustainable.
A 50% tariff would be a “non-starter” for Brough Brothers. They would have to absorb the cost somehow or raise prices on their products.
Jason Bailey heads the Kentucky Center for Economic Policy. He says the bourbon industry is a good target for retaliatory tariffs because it’s so deeply American.
“Ninety-five percent of the world's bourbon is made in Kentucky, and so when tariffs go up, or just prohibition of sales of bourbon, in this case, it's going to hurt us right in the gut.”
Bailey said even as trade wars conclude and tariffs rescinded, the impacts could be long-lasting.
“If people get used to a certain product and then it goes away when it comes back, and some time later, they may have lost interest,” Bailey said. “They may have decided to purchase something else that they find more interesting in one way or another.”
In a December press release, the Kentucky Distillers Association said since 2018 retaliatory tariffs from the EU and other countries have cost the industry “a half-billion dollars in exports since 2018.”
“If tariffs targeting American Whiskey are levied, distillery workers, farmers, truckers, coopers, hospitality staff and entire industries that depend on Bourbon will suffer,” KDA president Eric Gregory said in the same release.
Bigger brands like Brown-Forman, which produces Jack Daniels, told investors on a call last week that tariffs from the EU would be a big disadvantage.
But Yarbrough and his brothers are not deterred. He doesn’t fault other nations for responding in the way they see fit.
In the meantime, they will keep making Brough Brothers bourbon, vodka, rum and gin.
“We have to find other alternatives to these markets, whether it be additional markets or whether it be the actual furtherance of the U.S. market. We're in 23 states right now, is it? You know, we focus on the other 27.”
