EU Delays Tariffs On Whiskey, But Kentucky Bourbon Industry Still In 'Chaos': Morgan McGarvey

Forbes Breaking News

The European Union announced that they are now waiting until mid-April to slap some U.S. imports, including whiskey, with retaliatory tariffs. Congressman Morgan McGarvey (D-KY) joined "Forbes Newsroom" to discuss how the looming retaliatory tariffs will impact his state's bourbon industry.  Fuel your success with Forbes. Gain unlimited access to premium journalism, including breaking news, groundbreaking in-depth reported stories, daily digests and more. Plus, members get a front-row seat at members-only events with leading thinkers and doers, access to premium video that can help you get ahead, an ad-light experience, early access to select products including NFT drops and more:  https://account.forbes.com/membership/?utm_source=youtube&utm_medium=display&utm_campaign=growth_non-sub_paid_subscribe_ytdescript   Stay Connected Forbes on Facebook: http://fb.com/forbes Forbes Video on Twitter: http://www.twitter.com/forbes Forbes Video on Instagram: http://instagram.com/forbes More From Forbes:  http://forbes.com

Transcript

00:00Hi, everybody. I'm Brittany Lewis, a breaking news reporter here at Forbes. Joining me now

00:07is Congressman Morgan McGarvey. Congressman, thank you so much for joining me.

00:12Thanks for having me.

00:13Your state has been in the news because there is something coming down the pike in Kentucky.

00:18The European Union announced that they are now waiting until the middle of next month

00:23to slap some U.S. imports with retaliatory tariffs, and those products do include whiskey.

00:29This is really going to impact Kentucky because, reportedly, 95 percent of all the bourbon

00:33made in the world is made in your state. So what's your reaction to the news that these

00:38tariffs are even happening in the first place and that they were kicked down the road just

00:42a few weeks?

00:43Yeah, the reaction to the news of the tariffs is, I mean, it's devastating. And this isn't

00:47a guess. We saw this in Trump's first term. And in Trump's first term, when we put these

00:52broad tariffs on products, the retaliatory tariffs to the bourbon industry cut our exports

00:58in half. I mean, think about that. When you're thinking the bourbon we're sending out of

01:03this country, it cuts them in half. That impacts everybody. That impacts the farmers who put

01:09the corn in the ground. That impacts the coopers who put the bourbon in the barrel, the union

01:13workers who put the bourbon in the bottle, the people who drive it to the stores. Bourbon's

01:17a nine billion dollar industry for my state. You said 95 percent of the world's bourbon

01:21is made in Kentucky. We know what happens when they retaliate with these tariffs. And

01:26those were a 25 percent tariff. Now the EU is talking about a 50 percent tariff. So twice

01:31as much for the tariff and already it cut exports in half. I mean, people here are really

01:36worried. They're really anxious. And even though the tariffs have now been announced

01:40that they're delayed, there's still that chaos. There are still people in Kentucky right now

01:45who are going to go to sleep tonight wondering what happens when these tariffs go into effect.

01:50Are they going to have a job? Are they going to be able to feed their family? And that's

01:53really problematic for us here at home. And I think if I'm a business owner and you're

01:58saying this cuts the exports in half of my product, I would be terrified. And this is

02:04affecting, as you said, everyone from the farmer to the person who puts it in the bottle

02:08to the person who drives it to the store. What are your constituents saying to you?

02:13You know, if you live in Louisville, Kentucky, you probably know someone who works in the

02:17bourbon industry. It is it is our signature industry. So this isn't some far away removed

02:23problem where we have to use fancy economic terms to talk about it. You know, your neighbor

02:27down the street who does something with the bourbon industry. And are they going to have

02:31a job? Are they going to be able to continue to provide for their family? Is this going

02:36to cut revenue as much as it did the last time? In Trump's first term, we lost hundreds

02:41of millions of dollars in revenue in the bourbon industry in Kentucky. And again, that was

02:47when the tariffs were 25 percent. These 50 percent tariffs go through. I mean, people

02:52here are worried because we know it's going to be devastating.

02:55Let's talk about those economic impacts just a little bit more, because as you said, it

03:00could be devastating. It could affect the industry by millions. So when this goes into

03:04effect and if it does, how does that affect Kentucky's bourbon industry? And Kentucky's

03:09a red state. I know you're a Democrat, but it's a red state. So what are your conversations

03:13with your Republican colleagues looking like here?

03:17You know, this is one where I hope as Kentuckians we see this the same way. We know this is

03:23devastating for the bourbon industry. There's not a dispute about that. There's not a

03:26partisan dispute. There's not a dispute among economists. And even you've heard Mitch

03:31McConnell and Rand Paul come out against these broad based tariffs. Mitch McConnell put

03:37an opinion piece in The Courier-Journal where he said that these Trump's tariffs could

03:41cost the average Kentuckian over $1,200 a year in the cost of our goods going up. That

03:46doesn't mention the impact of our state's signature industry. So we know it's going

03:50to be tough. We know it's going to hurt people's pocketbooks. We know it's going to hurt

03:53people's jobs. And the chaos right now, the chaos that's happening from Trump's on

03:58again, off again plan, I don't even want to call it a plan because it's there was one

04:03week here recently where on Monday the tariffs were on, Tuesday they were off, Wednesday

04:07were on, Thursday they were off. And the bourbon industry, how do you prepare for that?

04:12So we've talked about the direct impact to the bourbon industry. We also have a lot in

04:16Kentucky with bourbon tourism, where they're trying to invest in distilleries, invest in

04:22the bourbon trail, invest for people to come into our state, which impacts so many other

04:25industries. If I were running a company right now and looking at my exports being cut in

04:30half or worse, you're probably not planning those investments, which hurts other industries

04:36here in Kentucky. So we know it's bad. And I think you see a lot of us pushing back against it.

04:41And I want to talk about the effect of other tariffs, because as you know, the United States

04:45has been in a back and forth tariff threat. They're on again, they're off again with Canada,

04:50paired with President Trump calling former Prime Minister Trudeau, the 50 for Canada,

04:55the 51st state Trudeau, the governor. Canada is really angry by this. Some provinces are

05:02pulling American liquor off the shelves. Is that impacting Kentucky as well?

05:06Absolutely. I had one bourbon company here in Kentucky tell me they expect to lose 40

05:11to 50 million dollars in sales in Ontario province alone. And not only are they taking

05:17the bourbon off of the shelves, they're canceling orders. I think that's really important to note,

05:22too. It's not just that everything's going to go up here at home. Our cost of our goods are

05:27going to go up. Canada is Kentucky's largest trading partner, by the way, just as as a side

05:31note that they're also canceling the orders to our bourbon companies here. So we're we're looking

05:37at losing exports across the globe. Canada's canceling orders. They're removing bourbon off

05:41the shelves. This has a major impact for us here in Kentucky, losing orders, canceling orders,

05:47losing exports. Millions of dollars hangs in the balance right now for your state.

05:53How are you telling your constituents who are really concerned by this chaos?

05:57How are you even telling them how to prepare?

05:59Yeah, well, I mean, you can't prepare for something that has no strategy or plan. And

06:04that's clearly what these broad based tariffs that Donald Trump is putting into effect.

06:09They're doing right. They're broad based. They're they're on our allies. They're on

06:13all sorts of different goods. And there's no clear strategy involved.

06:17Now, I tell people all the time, a tariff isn't good or bad. A tariff is a tool and it can be

06:24a powerful tool if it has a plan behind it. So think about like when we're trying to incentivize

06:29the making of semiconductor chips here in the United States, you pass legislation,

06:34you incentivize it, then you put a tariff on it so that people would have to pay more for those

06:39same chips that are coming into our country made other places. Now they're paying they're buying

06:44them from American made companies, helps manufacturing, helps jobs, helps national

06:47security, does those sorts of things. There is no plan behind Donald Trump's tariffs.

06:53There is no clearly articulated strategy. And so he is taking this tool and he's using it in a

06:58really inappropriate way. And I think about a tool you would use. A hammer is a good and useful tool

07:04for putting a nail in a wall. It's not so good for fixing your iPad. And so the way he is using them

07:10are going to be destructive and they're hurting us. They're hurting our friends,

07:13our neighbors, our signature industry here at home. To your point, I haven't had one conversation and

07:18I feel really lucky in my position. I've talked to Democrats in the House, Republicans in the

07:23House, as well as economists. No one has said they liked tariffs before the tariffs went into effect.

07:28I had a Republican congressman who's a staunch supporter of President Trump saying, hey,

07:33I don't really like tariffs at all. The markets certainly don't like tariffs. They were screaming

07:39when President Trump implemented them. And to your point about the slapdash nature of them,

07:43I had an interview a few weeks ago. Tariffs were one way. By the time the interview was over,

07:49the tariffs situation went a completely different way. So when you're thinking about

07:53President Trump's, what he says his reasoning is behind the tariffs, he's saying everything from

07:59the United States is being taken advantage of to this could bring manufacturing back to the

08:03United States. This is putting America first. This is curbing the fentanyl and immigration crises

08:08in the United States. Is this putting America first? What's your message to President Trump

08:14from Kentucky about these tariffs? I mean, just look at what the chairman of the Federal

08:19Reserve, Jerome Powell, said this week. Inflation is sticking around and you're

08:24paying more for stuff because of Donald Trump's tariffs, because there is no plan. There is no

08:29strategy. There is no articulable goal really behind these tariffs and what they're supposed

08:36to do. So here's what they are doing. They're getting us in a trade war with our allies and

08:41our friends. They are making the cost of everything we buy here at home more expensive.

08:47They are threatening jobs because when we put these broad-based tariffs on other countries,

08:52they then put retaliatory tariffs on us. That's what's happening with the bourbon industry. If

08:56these 50% tariffs go through on the bourbon industry, again, half of the bourbon exports

09:02were gone with a 25% tariff. Now you're going to double that. It's not hard to point out to

09:11people how this is going to hurt because everyone saw it with their own eyes during Trump's first

09:16term. The tariffs certainly aren't popular vastly amongst the American people, amongst members of

09:23Congress, Democrats specifically. I know you're a Democrat. I know you're saying, Kentucky,

09:28we're united here that this is going to devastate the bourbon industry that so many of us are

09:33involved in. But aside from Kentucky, when you're thinking about other Republicans that are your

09:38colleagues, what do those conversations look like? Does it feel that House lawmakers are in

09:44unison here that these tariffs are a bad idea? When you talk to people privately, you can kind

09:51of say, the cost of everything in your district is going to go up too. It's going to cost more

09:55to build a home in your district. It's going to cost more to do these things. It's going to cost

09:58more to buy these products in your district too. They know that. What I sense right now is a fear

10:04by House Republicans to stand up publicly to Donald Trump, even when they know what he is doing

10:10is hurting American consumers. It's hurting us and the stuff we buy. And so I would like to see

10:16them stand up and just say, we know what happened. We saw it in your first term. There's a reason

10:21that economists from across the ideological spectrum, this is not a left or right position,

10:26are saying that Donald Trump's broad based tariffs with no plan and no strategy are not good for us

10:34as Americans. And so let's stand up. Let's say it. Let's try to get these costs down. I mean,

10:39you walk around Louisville, Kentucky right now, and I'll tell you what people are talking about.

10:43People are talking about March madness. People are talking about what's the cost of goods?

10:48Are they gonna be able to pay rent? Are they gonna be able to pay child care? Are they gonna

10:51be able to do these things? Donald Trump promised to fix it on day one and said our costs have gone

10:56up in part because of his plans. Are Republicans saying that to you privately? I'm scared that

11:01Donald Trump is going to primary me if I stand up if I say this, because the retaliatory tariffs

11:07are going to impact goods in red states. You know, they don't have to say it. It's one of those

11:12things. Their silence makes it obvious. Because when you have a policy like this, that we know

11:17is not beneficial. They are not standing up, I think because Donald Trump has showed if you

11:23disagree with him, he's going to go after you. We saw this recently, when a congressman from

11:28Kentucky, Thomas Massey, said, you know what, I'm not voting for this budget. It's not any good. I'm

11:34not voting for this, this thing. It's gonna, it's gonna raise the debt in this country. He's right,

11:40the budget reconciliation will raise the debt in this country. Donald Trump said he's coming

11:44after him. And that's why I think Thomas Massey was the only Republican who voted against it.

11:49I'm curious what you're looking out for next, because the EU paused this, it was supposed to

11:54go into the first wave of these retaliatory tariffs, supposed to go into effect April 1.

11:59Now they're kicking it to mid April. What are you specifically looking out for between now and then?

12:05What would be wonderful is a recognition that this broad based trade war without any clear

12:12objectives is not helping Americans. In fact, it is hurting American consumers. It's hurting our

12:19signature industry in the bourbon industry. And when you look at, look at spirits in particular,

12:24and I think it's important. To be a bourbon, you have to be made in America. We're not incentivizing

12:29the making of bourbon through these tariffs. You have to be made in America to be a bourbon.

12:33To be 100% agave tequila, you have to be made in Mexico. To be a champagne, you have to be made

12:39in France. We can't just make those products here with these tariffs. And so, you know,

12:46in that industry in particular, you can see it doesn't work. And it hurts our companies,

12:51it hurts our jobs, it hurts the people who want to buy it. And if these, if the rhetoric keeps

12:56getting escalated, and the temperature keeps getting hotter, you know, eventually Americans

13:01are going to be paying a hell of a lot of money to get a Guinness or a Heineken.

13:08Congressman, I appreciate your time today. I appreciate the conversation.

13:12You are welcome back anytime. Thank you again.

13:15No, thanks so much.

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