Trump's Trials - How a Kentucky distillery plans to survive during the constantly shifting trade wars

Episode Date: March 13, 2025

As the U.S. is embattled in a shifting trade war with Canada and impending tariffs from the European Union loom, bourbon makers in Kentucky are trying to find their footing and plan a path forward. Plus, NPR's A Martinez speaks with Jeffrey Sonnenfeld, an associate dean at the Yale School of Management, about how business executives are coping amid economic policy whiplash. Support NPR and hear every episode sponsor-free with NPR+. Sign up at plus.npr.org.Learn more about sponsor message choices: podcastchoices.com/adchoicesNPR Privacy Policy

I'm Scott Detro and you're listening to Trump's terms from NPR. We're going to be doing all sorts of things nobody ever thought was even possible. It's going to be a very aggressive first hundred days of the new Congress. An unpredictable and transformative next four years. The United States is going to take off like a rocket ship. Each episode we bring you NPR's coverage of President Trump acting on his own terms. And that means sometimes doing things that no American president has tried before. NPR is covering it all in stories

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Now, I'm Michelle Martin. Okay, here's a quick recap of what's been happening in the trade wars. President Trump said he would add 25 percent tariffs on Mexican and Canadian imports. They were postponed, went into effect for a few days, then mostly postponed again. He's also added taxes on steel and aluminum from around the world, which Europe says will lead to tariffs on American goods like bourbon, jeans, and motorcycles. So what to do if you're a business caught in the middle? Brea Jones with Louisville Public Media has that story. Victor Yarbrough is pouring water into a large steel pot that he'll use to heat ground rye,

corn, and malted barley. He's making Brough Brothers bourbon at his distillery in West Louisville. He was in talks to get his liquor onto shelves in New Brunswick, Canada. Last week, he reached out after hearing that U.S. alcohol was being banned in several provinces. The response was, yes, they've had a directive from the government saying, look, don't take any alcohol. So, we've effectively had that deal suspended indefinitely. And now, starting April 1st, the American whiskey industry is likely to get hit with

50% tariffs from the European Union. They are in response to U.S. tariffs of 25% on steel and aluminum. And it just makes it extremely difficult to do any business, but, you know, ultimately we'll see if there's some type of negotiations that take place. He remembers tariffs of 25% on bourbon during Trump's first administration. Those were suspended when President Biden entered office. Now the EU is doubling down to 50. Jason Bailey heads the Kentucky Center for Economic Policy. He says the bourbon industry is a good target for retaliatory tariffs to hit a conservative

state. 95% of the world's bourbon is made in Kentucky. And so when tariffs go up or just prohibition of sales of bourbon in this case, it's going to hurt us right in the gut. The Kentucky Distillers Association calls the 50% retaliatory tariffs disrupting. But Yarbrough and his brothers are not deterred. He says they'll keep making bro-brothers bourbon, vodka, rum, and gin. We have to find other alternatives to these markets, whether it be additional markets

or whether it be the actual farther and sub the U.S. market. We're in 23 states right now. Is it, you know, we focus on the 27th? As a smaller distiller, he still has options for growth. Larger brands like Jack Daniels, they recently told their investors that tariffs would be a big disadvantage. For NPR News, I'm Brea Jones in Louisville. You're listening to Trump's Terms from NPR.

I'm Scott Detro. And what you just heard was not the only big news that we have to share today about the Trump administration. Here's another story from NPR's latest coverage. The me Martinez in Los Angeles, California. Big businesses are even more dependent on global trade. Here's what some CEOs are saying about the effects of tariffs. BlackRock's Larry Fink thinks tariffs could be productive eventually, but he's hearing

from the businesses he talks to now that the economy is weakening as we speak. And JP Morgan's Jamie Dimon said, uncertainty is not a good thing. Jeffrey Sonnenfeld is an associate dean at the Yale School of Management. He just wrapped up his CEO caucus in Washington, DC with about a hundred top executives. Jeffrey, I gotta imagine that CEOs are probably a little bit more forthcoming in private. What'd they tell you?

What can you share with us? No, that's exactly right. It was an amazing contrast between the business rounds they went to in the afternoon where they sat like in the church basement somewhere in rows and columns finally pious uh... for the president of ramp the exact people you know a hundred of them but whether or not the cd of the jp morgan pfizer del good year duke energy

stanley black and decker steel case and others are eighty p americans they're going quite candidly with each other about what dismay they have. We also had 60 major city US mayors with them to keep everybody honest. They're very discouraged. 80% of them say they find themselves apologizing to our international partners for Trump's capriciousness and 85% say the Biden economy that Trump was handed was a strong legacy. And roughly 70% say the Trump administration is going to be bad for the economy.

And they're very concerned just with the quote you had from Larry Fink. 92% of them say that they are increasingly concerned that the US economy is headed towards a recession. But Jeffrey, are they shaking in their boots or are they just kind of annoyed? They're actually shaking in their boots or are they just kind of annoyed? They're actually shaking in their boots. Something which caught us by surprise is while they thought that the market has fallen over 10 to 12 percent, and that's the same with consumer confidence, that the Michigan survey has fallen by that same amount, 10 to 12 percent, which is stunning in this short amount of time, and the M&A deal activity has dropped off, which is undeniable. It hasn't been this low in over a decade. They want the markets to drop yet even more before they start to speak out because they're so concerned about

Trump's vindictiveness that the couriers of bad tidings get shot by this emperor. Wait, so look, Jeffrey, let me understand something. So if the markets get worse, if things get worse, then they're in a stronger position to criticize it because then it's obvious to everyone. Yes, right now they do have market fluctuations as large as 10%, which are alarming but not cause to set the place on fire. However, if it drops by another 10%, they feel that will be the time they have to speak out on the economy.

What caught us by surprise is they feel it's time to speak out now on the degradation of national security. The demoralization and mass layoffs at the CIA, the FBI, the dismissal of the foreign interference task forces in the Justice Department, and the relaxation of cybersecurity, where we have 1,000 hits a day on the White House alone on cyber attacks. They think it's time now to speak out on the defense national defense national security issues, but they want to wait a little bit for things to get even worse on the economy before they collectively speak out.

Jeffrey, let me squeeze in really quick Commerce Secretary Howard Ludwig. This is what he told CBS News when he defended the administration's trade policy. The only reason there could possibly be a recession is because of the Biden nonsense that we had to live with. These policies produce revenues, they produce growth, they produce factories being built here. So is that what other CEOs think as well? I mean, that tariffs will ultimately, eventually produce a growing economy.

No CEOs think that. And other than the fact there's no CEO we know that thinks Howard Lutnick knows quite what he's talking about. He reverses himself with the head spinning speed of Donald Trump himself. He was screaming and yelling just two days ago, there will not be a pause. And then literally within the hour, he said there will be a pause on tariffs with Canada. He bounces all over the place.

But the Biden economy, as these CEOs that just shared that data with you showed, 85% of them tell us that this is the strongest economy, not only in their lifetime, but the Biden economy they're handling, one of the strongest in American history, the strongest in the world. That's what 85% of CEOs say, other than no matter what Howard Ludnick says, we haven't had unemployment this low from the Biden years since Bonanza was the number one show on television in 1968. That's just ludicrous.

So, very handed, you know, an economy that had 17 market highs in a year. I've only seen Bonanza in reruns, Jeffrey. Jeffrey Seinfeld is a senior associate dean at the Yale School of Management. Jeffrey, thanks. Thank you. Thank you. Before we wrap up, a reminder, you can find more coverage of the incoming Trump administration

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