The maker of Jack Daniels whiskey warned Wednesday that tariffs imposed during the Trump administration’s global trade conflict may curb profit indefinitely after undermining the business’s growth during the past three months.
In the quarter through October, duties imposed by allies retaliating for levies that President Trump says will ultimately benefit the U.S. shaved about 2 percentage points from underlying sales gains, Louisville, Ky.-based Brown-Forman Corp. said in a statement. Total revenue was flat, at roughly $910 million, in the period.
“If not for the tariffs, we would be on track to not just deliver another great year of top-line results, but also bottom-line,” said incoming CEO Lawson Whiting, who currently serves as the firm’s chief operating officer.
Instead, Brown-Forman lowered its full-year earnings target by 5 percent to as much as $1.75 a share. “These tariffs have certainly presented challenges across many areas of the company,” Whiting said, including its supply chain and teams in affected markets across Europe, Mexico, and Canada.
The company’s dilemma reflects challenges across a range of industries grappling with fallout from Trump’s imposition of double-digit metals duties on American rivals and allies alike while simultaneously charging tariffs on $250 billion of Chinese imports and threatening levies on automobiles.
Despite warnings from economists, lawmakers, and corporate executives that his policies risk undermining the benefits of last year’s GOP-led tax cuts and curbing global growth, Trump has remained unfazed. “I am a Tariff Man,” he said on Twitter as questions swirled Tuesday about the benefits of a trade-war truce he had negotiated with Chinese President Xi Jinping.
At Brown-Forman, while sales had climbed in the first three months of the budget year as buyers stocked up on whiskey before the tariffs could take effect, that growth fizzled when the duties were applied, said retiring CEO Paul Varga.
The European Union imposed duties on nearly $3.4 billion in U.S. products from bourbon to orange juice and motorcycles, hitting states such as Kentucky, Florida, and Wisconsin, which supported Trump in 2016 after the White House refused to exempt the trading bloc from metals duties.
Canada, stung by the same duties, added levies that included a 10-percent charge on whiskey imports totaling $48.7 million in 2017, according to the Distilled Spirits Council, an industry trade group. Mexico imposed charges of 25 percent on shipments valued at $13.4 million.
