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Kentucky Governor Grapples With Tariffs, Says 2028 Call Can Wait

(Bloomberg) -- The governor of one of America’s most trade-reliant states has a warning for President Donald Trump: Tariffs are hurting the industries he’s trying to revive.

Kentucky’s Andy Beshear, one of a dying breed of red-state Democrats, is in his second-term running a manufacturing powerhouse in the US heartland — which now finds itself at the center of Trump’s policy shifts.

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Kentucky bet big on electric cars, only to see the administration kill a key incentive. It’s welcomed major manufacturing investments, only for companies to face tariffs and the threat of immigration raids. And Beshear argues there’s more pain to come from Trump’s trade war.

“The impacts are hitting the economy in Kentucky and across the country. They haven’t been fully felt yet,” he says in an interview in the state capital of Frankfort. “While Donald Trump says he wants to reshore American manufacturing, his tariffs are actually preventing it from occurring.”

All that might explain why the Bluegrass State is home to three of the last prominent Republicans willing to buck Trump on tariffs and other issues — and to Beshear, who’s also grappling with his own party’s branding and how it can win back the White House. The 47-year-old, sometimes mentioned as a potential candidate in 2028, says any decision on whether to run is a long way off — while the threat from Trump’s tariffs is immediate and escalating.

‘Wait a Minute’

Kentucky ranked first in the nation last year for imports relative to its economy, and is among the top trading states overall. It’s a one-time coal giant turned manufacturing hub, with major auto and aerospace plants and, of course, its iconic bourbon. A bottle emblazoned with Beshear’s dog’s likeness sits on a shelf in his office at the Old Governor’s Mansion. Just above it sits Beshear’s own portrait, on a Kentucky Fried Chicken bucket.

KFC might not be on the trade war’s front lines, but many of the state’s key industries are. Bourbon makers are facing boycotts — including in Canada, Kentucky’s top export market and a country in Trump’s crosshairs. Manufacturers like Ford Motor Co., which has a plant near Louisville, now face tariffs for inputs like steel and aluminum.

Beshear says it’s the unpredictability of Trump’s tariff rollout that’s causing much of the trouble. “The only thing that doesn’t change is that it’s going to change every day,” he says. Industry experts aren’t being consulted, and “the president might think he’s helping domestic manufacturers, but in fact he’s hurting them.”

Trump says taxing imports will encourage more local production, and points to a string of multi-billion-dollar investment pledges by big-name firms. Kentucky is getting its share: in recent months, Apple Inc. and GE Appliances have announced plans to expand production there.

Still, Kentucky’s Chamber of Commerce echoes Beshear’s concern. The statewide economy is ripe for growth, says Kate Shanks, its senior vice president. But tariffs are “making businesses maybe think, well, let’s just wait a minute on what we want to expand and what we want to do.”

When the 2028 presidential contest rolls around, there’ll likely be a sharp spotlight on America’s pivot to protectionism under Trump, and whether the Democratic contenders will pledge to reverse course. Trump’s first-term China tariffs drew plenty of criticism early on. By 2020, there was bipartisan consensus to keep them, which his successor Joe Biden largely did.

Trump’s second-term tariffs are orders of magnitude bigger. They’re also bringing in lots of revenue for the federal government, something that typically appeals to politicians of all stripes. And the levies are not all unpopular. Beshear says some targeted duties can be useful — “steel and aluminum tariffs can make sense when done the right way” — and especially when aimed at adversaries like China that are hurting US industry by dumping their output.

But he says the overall effect of ramping up trade barriers is harmful. “You don’t have to just believe me, the Democratic governor of Kentucky. Both of my Republican senators say that too.”

Kentucky’s Mitch McConnell and Rand Paul are outspoken critics of tariffs, as is Representative Thomas Massie, an occasional Trump critic whom the president is trying to unseat. “Put me down as a guy who hopes the trade war isn’t very long, because if it’s prolonged it means higher prices for all of you,” McConnell, who’s retiring after his term, said at a Kentucky Farm Bureau event in August.

‘Fight the Future’

For America’s auto giants, tariffs aren’t the only challenge. There’s also the looming question of the industry’s direction. Biden made a big bet on electric vehicles, while Trump has pulled back subsidies.

Ford’s operations in Kentucky, which employ more than 13,000 workers all told, illustrate the two poles. The massive Kentucky Truck plant in Louisville builds highly profitable and gas-guzzling jumbo SUVs — the Lincoln Navigator and Ford Expedition — as well as pickup trucks.

Meanwhile, the company is spending $2 billion to build budget electric cars at the Louisville plant even though Ford lost $5.1 billion on its EV business last year and says this year could be worse.

And 50 miles away in Glendale, Ford and its partner SK On of South Korea began producing batteries for the electric F-150 Lightning pickup truck in August. Their joint venture – known as BlueOvalSK — got a big loan from Biden’s Department of Energy, but is now searching for customers amid the EV slowdown.

Beshear signals full support for the electric revolution. “A lot of people have tried to fight the future, and no one’s ever won,” he says. “EVs are where the world is going.”

With multiple South Korean firms producing in Kentucky, as well as Japanese auto giant Toyota, Beshear says he’s not comfortable with the kind of metrics Trump invokes to support his America-first approach. “To me, trade policy is a lot more complicated than how many American cars are in Japan or vice versa,” he says.

‘Chaos and Cruelty’

Kentucky’s investors in particular are facing potential uncertainty on another front after the high-profile immigration raid in Georgia last month, which saw hundreds of Korean workers detained and sent home.

It sparked a diplomatic furor, leading South Korea’s president to say it’s now “difficult to invest in the US” and warning that joint ventures risk getting stalled. Trump has since acknowledged the need for major projects to have some clarity around visas for foreign workers, especially trainers.

Beshear says that as far as he knows, “all investments in Kentucky are proceeding.” About the conduct of the Georgia raid, he says: “What I saw was a lack of humanity and respect in how we enforced our immigration laws that day.”

He wraps his critiques of how immigration and trade policies have been rolled out into a phrase that almost sounds like a campaign slogan for someone running against Trump’s record: “He’s governed with chaos and cruelty.”

Whether Beshear will make such a run remains to be seen.

McConnell, who served for years as the top Senate Republican, predicted that Democrats would press him to run for the Senate instead. He told the Lexington Herald-Leader that Beshear was a “gifted politician” but a long-shot in 2028.

The Kentucky governor was considered when former Vice President Kamala Harris was picking a running mate. He now offers a diagnosis of why Trump beat her – as well as a description of the kind of nominee the party needs next time, whether it’s him or someone else.

“The Democratic Party has lost the faith of working people that we are focused on them,” Beshear says. He thinks Trump was victorious in part because he won over undecided voters on that measure, while “the vice president was distracted by a lot of other issues.”

“I’m trying to be a common-sense, common-ground, get-things-done type of voice,” he adds. The Democrats need a candidate who can bridge divides, and “if we think I’m that candidate, I’ll consider it.”

Some of the more prominent Democratic governors expected to seek the nomination, such as California’s Gavin Newsom — an early frontrunnner in the betting markets — and JB Pritzker of Illinois, have already become targets of Trump’s attacks.

Beshear is the incoming chair of the Democratic Governors Association, and says for now he’s focused on scoring some victories for his cohort in midterm elections that are just over a year away.

“I’ve got 36 races, and let me tell you, we’re gonna change the map,” he says. “We’re gonna win in some places that nobody’s expecting. And then after that, we’ll see.”

--With assistance from Keith Naughton, Mark Niquette and Gabrielle Coppola.