The maker of Jack Daniel's Tennessee Whiskey is emerging as an unlikely opponent of President Trump's protectionist tilt.
During a phone call with analysts on Wednesday, Paul Varga the chief executive of Brown-Forman Corp. confirmed that the European Union's threats of retaliatory tariffs against "distinctly American products" is rattling leaders of the American business community.
Brown-Forman, the maker of Jack Daniels Tennessee Whiskey, could become "an unfortunate and unintended victim of the policy," Varga warned.
"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."
After Trump surprised markets by announcing his plans to impose the aluminum and steel tariffs late last week, the EU fired back on Monday by threatening to impose tariffs on (a relatively modest) €2.8 billion ($3.5 billion) of American goods, with Brussels aiming to apply a 25% tit-for-tat levy on a range of consumer, agricultural and steel products imported from the US.
The list of targeted US goods includes motorcycles, jeans and bourbon whiskey, and was intended to send a political message to Washington about the potential domestic economic costs of making good on the president’s threat.
As Bloomberg points out, Jack Daniel's anxieties are an example of how the tariffs could impact US industries that don't directly rely on imports of aluminum and steel. And as BBG reminds us, 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 US and Russia.
Varga assured analysts that his company is speaking up about the potential threat to its business.
"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."
In the meantime, Varga can hopefully take some comfort in the fact that, should a "hot" trade war erupt, the US is considerably less exposed than other G-10 economies, as the chart below shows: