The CEO of Jack Daniel’s maker Brown-Forman has stated that the decision by Canadian retailers to remove U.S. alcohol from shelves in protest of President Donald Trump’s trade policies is more financially damaging to the company than the actual tariffs.
During the spirit maker’s quarterly earnings call on Wednesday, CEO Lawson Whiting expressed concern over the impact of blocking consumers from purchasing American-made products in Canada and other countries, labeling it as a severe blow for U.S. companies.
Whiting emphasized that while Canada only represents 1% of Brown-Forman’s sales, the company is more worried about the potential implications of broader tariffs in the European Union. He mentioned that Brown-Forman is preparing for the possibility of similar retaliatory actions by EU nations.
Morgan Stanley analyst Eric Serotta highlighted that tariffs would present unique challenges for Brown-Forman, with lasting effects anticipated. He noted that 55% of the liquor manufacturer’s sales come from international markets, and bourbon regulations mandate domestic production, preventing international production.
Analyst Robert Moskow from TD Cowen expressed concerns that other U.S. products could also be at risk of similar actions.
Earlier this week, the Liquor Control Board of Ontario, one of the largest importers of American alcohol to Canada, announced that it had ceased purchasing all U.S. products and advised Canadians to opt for domestically manufactured goods.
The tariff situation is rapidly evolving, with the White House recently postponing the enforcement of 25% tariffs on certain goods from Canada and Mexico for one month due to concerns about potential economic consequences. However, approximately 62% of products imported from Canada will still face tariffs as they do not comply with the United States-Mexico-Canada free trade agreement, as reported by AP.
Canadian Prime Minister Justin Trudeau announced on Monday that 25% tariffs would be imposed on American imports, with those duties still in effect as of Friday morning.