The Brewing Trade War: How U.S.-Canada Tariffs Are Impacting America’s Bourbon Industry
The U.S. and Canada are engulfed in a escalating trade war, and distilleries in Kentucky, the heart of America’s bourbon industry, are caught in the crossfire. The Trump administration’s decision to impose tariffs on Canadian goods has prompted a retaliatory response from Canada, which has begun removing U.S.-made liquor, including bourbon, from store shelves. This has led to canceled shipment orders, stalled liquor agreements, and significant financial losses for bourbon businesses, particularly those in Kentucky, which produces an estimated 95% of the world’s bourbon. The Kentucky Distillers’ Association reports that the bourbon industry contributes a staggering $9 billion annually to the state’s economy, making the current trade tensions a critical issue for local businesses and their employees.
The Immediate Impact on Kentucky Distilleries
The effects of the trade war are already being felt by Kentucky’s bourbon distilleries. Michter’s Distillery in Louisville, a family-owned business, has lost over $115,000 in canceled bourbon shipments to Canada, its largest foreign market. Andrea Wilson, the company’s chief operating officer, expressed her concern about the situation, stating, “We would prefer to see less tariffs than more.” The removal of U.S.-made liquor from Canadian shelves has also disrupted long-standing relationships between American distilleries and their Canadian partners. For many businesses, Canada has been a reliable and profitable market, making the sudden disruption particularly challenging.
The Broader Economic and Consumer Implications
While the immediate effects of the trade war are being felt by distilleries, U.S. consumers are unlikely to see a price increase on bourbon for at least a few months, according to Marten Lodewijks, president of the U.S. division of the beverage industry data firm IWSR. However, Kentucky distilleries could face an immediate pinch if shipments to Canada continue to be canceled. The state’s bourbon industry is a significant contributor to the local economy, and any prolonged disruption could have far-reaching consequences for businesses and employees alike. As the situation continues to unfold, the long-term effects on both the industry and consumers remain uncertain.
The Human Cost: How Small Businesses Are Being Affected
The trade war is not just affecting large distilleries; smaller, family-owned businesses are also feeling the pinch. Black-owned Brough Brothers Distillery in Louisville was in the process of negotiating a deal to sell its products in Canada for the first time when the tariffs were announced. CEO Victor Yarbrough explained that the deal fell through almost immediately, stating, “Everything’s been suspended, they don’t have the ability to purchase.” The company had plans to expand its reach to France and the United Kingdom by 2025, but those plans are now on hold. Yarbrough is considering alternative markets, such as South Africa or Brazil, but Canada would have been the more lucrative option. He expressed his frustration, asking, “How can we help get back to square one? How can we facilitate good, neighborly relationships that we’ve been having?”
The Long-Term Implications for the Bourbon Industry
The ongoing trade war has also raised concerns about the long-term implications for the bourbon industry. Fawn Weaver, founder of the Black-owned Tennessee whiskey brand Uncle Nearest, had her products pulled from Canadian shelves as part of the retaliatory measures. Weaver, who had anticipated the possibility of a trade war during the presidential campaign, explained that the tariffs have forced her to scale back her company’s global ambitions. “As an independent brand, I can’t afford those tariffs. I can’t afford to absorb it, and I can’t pass it on to the consumers,” she said. She also suggested that the current administration’s trade policies may be intended to encourage businesses to focus on the domestic market rather than expanding internationally.
A Call for Resolution and Cooperation
As the trade war between the U.S. and Canada continues to escalate, distilleries in Kentucky and beyond are calling for a resolution that will allow them to resume their international trade without the burden of tariffs. The bourbon industry, which has long relied on strong relationships with foreign markets, is particularly vulnerable to disruptions caused by trade tensions. For businesses like Michter’s, Brough Brothers, and Uncle Nearest, the ability to sell their products in Canada and other international markets is crucial to their success. As Andrea Wilson of Michter’s Distillery emphasized, “If we’re not selling to our largest export market, that’s a significant impact to our business, and it’s very sad for us, because we have friends, we’ve built relationships in that country for a long time.” The hope is that both the U.S. and Canada can find a way to resolve their differences and restore the neighborly relationships that have been foundational to their trade partnership for so many years.
