McConnell needs to help with tariffs

Published 11:24 am Monday, June 18, 2018

Where are you, Sen. Mitch McConnell?

Kentucky needs you.

What the Courier Journal warned about nearly a year ago is happening today: Bourbon is in the cross-hairs of an international trade battle, and the consequences could be dire for metro Louisville and the rest of the Bluegrass State.

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In retaliation to President Donald Trump’s alarming plan to slap tariffs on steel and aluminum imports from Mexico, Canada and the European Union, Mexico has imposed tariffs ranging from 15 percent to 25 percent against several U.S. imports, including bourbon. Canada is planning a similar retaliatory tariff plan.

On Wednesday, the European Union said it will begin imposing duties of 25 percent in July on numerous American-made products. And, yes, bourbon is included, along with tobacco products and appliances — all of which could severely sting Kentucky’s economy.

What does the adversarial tit-for-tat likely mean for Kentucky, which produces about 95 percent of the world’s bourbon? Jobs could be lost; manufacturers may see slowdowns; and there could be a crippling effect on the booming bourbon-related tourism industry.

So far, the Senate Majority Leader is timidly pushing back against the White House and Trump’s plan to slap tariffs on American allies.

“I don’t think anything good will come out of a trade war,” he said recently in Louisville. “And I hope we pull back from the brink here (because) these tariffs will not be good for the economy.We need to work this out in a way that’s comforting to everyone.”

Comforting? It’s time for action and mobilizing Congress to push back against the president, Sen. McConnell. It’s time to fight back against a shortsighted tariff war where the biggest loser could be the everyday Kentuckians who helped propel Trump to Pennsylvania Avenue.

A range of economists has given a thumbs-down to the tariff plan, sounding alarms that jobs in several of Kentucky’s signature manufacturing centers — bourbon, automotive and aircraft parts — could be lost.

The high-stakes drama comes at a time when the bourbon business is booming — and profits are flowing in — across Kentucky. The state’s $8.5 billion bourbon industry alone generates 17,500 jobs and $800 million in payroll. There are 16 distilleries under construction or planned in the state, including the ambitious Kentucky Owl Distillery in Bardstown.

That’s why a trade war would slam Kentucky and hurt more than just the bourbon industry. Kentucky bourbon generates $825 million in federal, state and local taxes each year, with some $20 million in barrel taxes, the majority of which go to fund local school districts.

And if this battle escalates and the U.S. retaliates by slapping tariffs on other countries’ liquor, it would be a double whammy to companies like Louisville-based Brown Forman, which owns distilleries in Scotland, Canada, Mexico and Ireland.

The Trump administration said its tariffs — 25 percent on steel imports and 10 percent on imported aluminum from the European Union — are needed because overcapacity in those industries is hurting U.S. businesses. That is a threat to our national security, he claims. Should unfair trade agreements be reviewed and remedied? Certainly, but you do not solve the problem with unilateral tariffs on our closest international friends, such as Canada. Too much is at stake.

The Kentucky Distillers Association is hopeful that “continued negotiations will avoid a costly trade war and protect our allies and partnerships around the world.”

We are too.

McConnell has said there are better ways to address trade imbalances. He has counseled Trump about the importance of avoiding a trade war and will continue to discuss the issue with the president and his constituents, a spokesman told the Courier Journal.

The time for genteel chatter has passed. We need strong action to protect jobs and Kentucky-made products.

McConnell told Fox News the Senate will not pass legislation that limits Trump’s tariff authority. That legislation, from a bipartisan group led by Sen. Bob Corker of Tennessee, would require congressional approval for any tariffs imposed for national security reasons. That’s a step in the right direction.

McConnell says there’s not much Congress can do, but he suggested that the bill’s authors, Corker and U.S. Sen. Patrick Toomey of Pennsylvania, could attach the measure as an amendment to the National Defense Authorization Act, a defense policy bill that the Senate is to take up this month.

Let’s consider every option.

Bourbon is our legacy.

Kentucky needs you to protect it.

Courier Journal