I just returned from a tense trade summit in Ottawa where American whiskey distillers painted a grim picture of their Canadian market collapse. The numbers are staggering – an 85% drop in U.S. liquor exports to Canada in just one month following retaliatory tariffs.
“We’ve essentially been wiped out of the Canadian market overnight,” Jake Thompson told me as we walked through his Kentucky distillery’s now eerily quiet shipping department. Thompson, a third-generation whiskey maker, has laid off six employees since Canada imposed its 10% tariff on American spirits in July.
The tariffs are part of Canada’s response to President Trump’s aluminum and steel levies that took effect earlier this summer. According to U.S. Treasury Department figures released yesterday, American liquor exports to Canada plummeted from $36 million in June to just $5.3 million in July – the first full month under the new tariff regime.
This represents the sharpest decline in cross-border spirit sales in modern history. The Distilled Spirits Council of the United States reports that American whiskey exports to Canada had been growing at roughly 12% annually for the past decade before this precipitous drop.
I spoke with Canadian Finance Minister Chrystia Freeland, who defended her government’s position while expressing sympathy for affected businesses on both sides of the border. “We didn’t choose this fight, but we won’t back down when our industries and workers are unfairly targeted,” she said during our interview at Parliament Hill.
The impact extends beyond major producers. In Virginia’s Blue Ridge Mountains, I met Sarah Jenkins, owner of Appalachian Craft Spirits, who has watched her small-batch whiskey business transform from growth story to survival struggle in weeks. “Canada was 40% of our business,” Jenkins explained as we toured her rural distillery. “Now those orders have disappeared completely.”
The pain isn’t limited to spirit makers. Glass manufacturers, packaging companies, grain suppliers and transportation firms are reporting significant downstream effects. Economic analysis from the Federal Reserve Bank of St. Louis suggests each distillery job supports approximately 4.7 positions in related industries.
Canadian consumers are feeling the pinch too. At Toronto’s Whiskey Exchange, owner Michael Chen showed me how prices for American bourbons have jumped 15-20% since July. “Our customers love American whiskey, but many are switching to Canadian or Scottish alternatives at these price points,” Chen said while pointing to newly empty shelf space formerly occupied by Kentucky brands.
Trade experts I consulted see little hope for quick resolution. “This is clearly part of a broader negotiation strategy around NAFTA and other trade issues,” explained Dr. Elena Rodriguez, international economics professor at Georgetown University. “Neither side appears ready to blink first.”
The U.S. Trade Representative’s office declined my requests for an interview, but issued a statement defending the original aluminum and steel tariffs as “necessary for national security.” Canadian officials I spoke with dismissed this justification as “absurd” given the countries’ defense partnership.
While visiting congressional offices in Washington last week, I observed bipartisan concern about the impact on rural communities. Senator Mitch McConnell, whose home state of Kentucky produces 95% of the world’s bourbon, has privately urged White House officials to reconsider their approach, according to two senior Senate aides who requested anonymity.
The timing couldn’t be worse for American distillers. Fall and winter holiday seasons typically generate 40-60% of annual export revenue. Industry analysts predict at least $300 million in lost sales by year’s end if the tariff standoff continues.
At Buffalo Trace Distillery in Frankfort, Kentucky, international sales director William Parker showed me a warehouse containing thousands of bottles originally destined for Canadian retailers. “We’re hoping for a breakthrough, but preparing for a long winter,” Parker said while surveying the backlog. “This isn’t just about profits – this is about people’s livelihoods in communities that have few other economic engines.”
As both countries dig in their heels, the casualties of this trade war continue mounting – one bourbon barrel at a time.
