Tariffs have American whiskey distillers on the rocks

Americans may find themselves paying more for a bourbon neat these days. U.S. whiskey distillers throughout the liquor industry are facing financial hardship lately, and economic experts are pointing to the Trump administration’s tariffs as a major cause. This includes Jim Beam, whose troubles have led to a drastic step: closing its distillery.

What brands are being impacted?

The economic slump has affected several iconic American brands. This includes Jack Daniel’s, Old Forester and Woodford Reserve, which are all owned by parent company Brown-Forman. The company previously announced it was “laying off about 650 employees, or 12% of its workforce, in the face of declining demand,” said The New York Times. Several other whiskey brands, including Garrard County Distilling Co. in Kentucky and Uncle Nearest in Tennessee, have been placed into receivership in 2025.

But Jim Beam has taken perhaps the most extreme move by announcing it would halt production at the plant’s main distillery in Clermont, Kentucky, for an entire year. The brand will “pause distillation at our main distillery on the James B. Beam campus for 2026 while we take the opportunity to invest in site enhancements,” the company said in a statement. This marks a significant step for the country’s largest bourbon manufacturer, given that this distillery “produces about a third of the company’s annual output of approximately 26.5 million gallons,” said the Times.

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How are tariffs causing these issues?

The ongoing challenges “straining the liquor industry” are “part of the fallout of Trump’s trade war,” said CBC News. These tariffs (and subsequent counter-tariffs from countries like Canada) led to a trade deficit as “overall exports of American spirits fell 9% in the second quarter of 2025 compared to the same period last year.” Boycotts of American alcohol brands have also contributed to this decline.

However, there are other factors afoot beyond tariffs; the statement put out by Jim Beam did not even mention tariffs. Another culprit is the skyrocketing supply of aging barrels. Kentucky has an “all-time high of 16.1 million aging barrels of bourbon in its warehouses,” said the Kentucky Distillers’ Association. Because these barrels are taxed by the state, Kentucky distillers paid a “$75 million tab in aging barrel taxes this year, a 27% increase from 2024 and an astronomical 163% increase over the last five years alone.”

Overall demand for whiskey and bourbon has decreased, which has now “caused an oversupply of whiskey,” said Bloomberg. Sales have slumped as “consumers rein in spending and drinking” during downward economic times. And much of the available product can’t even be sold right now — most of the 16.1 million barrels of bourbon currently being aged “won’t be ready to bottle until after 2030.”

Despite these other factors, Kentucky politicians seem to place the blame on the Trump administration’s shoulders. It is “hard to overstate just how devastating Trump’s tariffs are for America’s signature spirit,” said Rep. Morgan McGarvey (D-Ky.) in a post on X, referring to the Jim Beam closure. “Thousands of Kentuckians power the bourbon industry — we will all feel the impact of this.”