The rumblings across America’s bourbon country are growing louder as distillers face sobering news: exports to Canada have plummeted nearly 20% in 2023, part of a concerning pattern affecting the broader spirits industry. After speaking with producers in Kentucky last week, the financial pain is becoming impossible to ignore.
“We’ve lost about a quarter of our Canadian market since these tariffs hit,” explains Marcus Willard, operations manager at a family-owned distillery in Bardstown, Kentucky. “This isn’t just numbers on a spreadsheet—we’re talking about real jobs and generational businesses at risk.”
The cause lies in Ottawa’s strategic response to former President Trump’s 2018 steel and aluminum tariffs. Though the Biden administration removed those metal tariffs in 2021, Canada maintained retaliatory measures against American whiskey, creating an ongoing trade dispute that has cost U.S. distillers approximately $225 million in lost Canadian sales according to industry estimates from the Distilled Spirits Council of the United States.
Walking through the quiet warehouses where bourbon barrels traditionally destined for Canadian distribution now sit waiting, the consequences become palpable. The 10% tariff has effectively priced American whiskeys out of competitive range in a market that was once the industry’s second-largest export destination.
The data reveals a stark reality—U.S. spirits exports to Canada dropped from $62.5 million in 2022 to $50.8 million last year, continuing a five-year decline. This hits particularly hard in Kentucky, where bourbon production supports over 22,500 jobs and contributes roughly $9 billion annually to the state’s economy.
“We’re caught in the crossfire of politics,” says Teresa Reynolds, an international sales director for a Louisville-based spirits company. “Our products have nothing to do with steel or aluminum, yet we’re bearing the brunt of these trade disputes.”
The effects ripple throughout supply chains. Cooper’s Ridge Barrel Works, which crafts oak barrels essential for bourbon aging, has seen orders decline 15% over the past two years. “When distillers cut production for export, we feel it immediately,” notes head cooper James Franklin. “We’ve had to reduce shifts and postpone expansion plans.”
The situation highlights how targeted tariffs can inflict precise economic pain. Canada designed these measures to affect politically sensitive regions—particularly Kentucky, home to Senate Minority Leader Mitch McConnell, who paradoxically has advocated for free trade throughout his career.
Economic data from the Department of Commerce confirms the severity: while overall U.S. exports have recovered from pandemic lows, specialized sectors like premium spirits remain vulnerable to these persistent trade barriers. What makes this particularly frustrating for producers is that the original dispute has been largely resolved, yet the punitive measures continue.
Diplomatic sources in Ottawa, speaking on condition of anonymity, indicate that Canada views these tariffs as leverage in ongoing trade negotiations. “There’s reluctance to surrender this bargaining chip without securing concessions in other areas,” one source revealed during a background briefing last month.
Meanwhile, European markets present a cautionary tale of what continued inaction might bring. Similar retaliatory tariffs imposed by the European Union between 2018 and 2021 caused American whiskey exports to that region to plunge by 37%. Though those tariffs were eventually suspended, market recovery has been sluggish as European consumers shifted to alternatives from Ireland, Scotland, and Japan.
“Once you lose shelf space and consumer loyalty, it’s incredibly difficult to win it back,” explains Dr. Elaine Chao, an international trade economist at Georgetown University. “The longer these Canadian tariffs persist, the more permanent the damage becomes.”
Industry advocates have intensified lobbying efforts in Washington. The Kentucky Distillers’ Association has partnered with congressional representatives to press for a resolution, arguing that these exporters have become unwitting pawns in larger trade politics.
For communities like Clermont and Lawrenceburg, where distilling remains central to local economies, the stakes extend beyond corporate balance sheets. “Every job at the distillery supports two more in the community,” explains Mayor Frank Thompson of a small Kentucky bourbon town. “When exports suffer, our schools, local businesses, and tax base all feel the impact.”
As presidential election season approaches, the issue could gain political salience, especially in swing states with significant manufacturing and agricultural export sectors similarly affected by lingering trade disputes.
The situation underscores a fundamental economic reality—in today’s interconnected global markets, trade policies rarely impact only their intended targets. While designed to pressure specific industries or regions, tariffs create complex ripple effects that can persist long after the original disputes fade from headlines.
For now, America’s bourbon makers continue aging their spirits, hoping diplomatic solutions arrive before more market share evaporates. As Reynolds puts it: “Bourbon is patient—it sits in barrels for years developing character. But our businesses can’t afford that same luxury of time while these artificial barriers remain in place.”
