Jack Daniels
Jack Daniels

Jack Daniel's Maker Warns It May Be Victim of Tariffs

March 7, 2018
The bourbon, which is made in the US by a company that has increased its investment in the US, was drawn into the fire when the EU said it would retaliate with tit-for-tat tariffs on American goods, including bourbon.

President Donald Trump’s metal tariff proposal has roused an unexpected foe: the maker of Jack Daniel’s.

Brown-Forman Corp., which makes the iconic Tennessee whiskey, won’t feel much of a direct impact from the levies -- its biggest drinks are packaged in glass, not cans. But American whiskey was drawn into the fire when the European Union announced it would retaliate with tit-for-tat tariffs on American goods, including bourbon, denim and motorcycles.

That’s led Brown-Forman to strongly oppose the tariffs, CEO Paul Varga said in a call with analysts on March 7.

“Brown-Forman could be an unfortunate and unintended victim of the policy,” he said.

“The overwhelming majority of our products are made here in America and over the last few years, I’d just cite, we’ve been investing heavily in our American manufacturing expansion.”

The trade battle is an example of how the tariffs could affect a broader swath of industries than those with aluminum and steel in their supply chains.

Bourbon accounted for about a fifth of total U.S. spirits exports to the EU in 2017, according to the Distilled Spirits Council of the U.S., a trade group.

This isn’t the first time that the maker of Jack Daniel’s and Woodford Reserve bourbon has been pulled into the political fray. In 2014, the company found itself in the middle of a spat between the U.S. and Russia.

“It’s not new to Brown-Forman to periodically have things in the macroenvironment arise,” Varga said. “We’re going to monitor the potential for retaliatory tariffs closely. And of course, we’re sharing our point of view in Washington, as well.”

By Jennifer Kaplan

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Licensed content from Bloomberg, copyright 2016.

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