The chilled relations between Washington and Ottawa have extended beyond diplomatic corridors into an unexpected arena – the spirits market. American whiskey, bourbon, and other liquors are experiencing their steepest decline in Canadian sales in nearly a decade, with experts pointing to a complex interplay of trade tensions, shifting consumer preferences, and lingering pandemic-era market disruptions.
“We’re seeing U.S. spirits shipments to Canada down almost 17% year-over-year,” says Danielle Eddy, market analyst with the Distilled Spirits Council. “That’s significant when you consider Canada has historically been our second-largest export market after the European Union.”
The slowdown comes amid deteriorating trade relations following Canada’s decision to maintain tariffs on American whiskey and bourbon as part of ongoing disputes over steel, aluminum and softwood lumber. Unlike the European Union, which dropped similar retaliatory tariffs in 2021, Canada’s 25% levy continues to hamper U.S. distillers seeking northern expansion.
At Toronto’s Kensington Wine Market, manager David Michiels has observed the shift firsthand. “Our customers are increasingly gravitating toward Canadian craft whisky, Japanese options, and even emerging Scottish single malts rather than traditional American staples,” Michiels explains while restocking shelves that once prominently featured Kentucky bourbon. “Five years ago, we couldn’t keep Buffalo Trace in stock. Now it sits longer.”
The Canada Border Services Agency reports that import volumes of American spirits decreased by approximately 21% in value during the first quarter of 2024 compared to the same period last year. Statistics Canada data confirms this represents the most significant year-over-year decline since 2016.
Beyond tariffs, industry observers point to evolving Canadian drinking habits. The “support local” movement has gained substantial traction, particularly among younger consumers. A recent Angus Reid survey found that 67% of Canadian drinkers under 40 now prioritize locally-produced spirits when making purchasing decisions – up from 41% in 2019.
“There’s been a renaissance in Canadian whisky,” notes Davin de Kergommeaux, author of Canadian Whisky: The New Portable Expert. “Craft distilleries in places like British Columbia and Ontario are creating world-class products that are winning international awards. Consumers feel they no longer need to look south of the border for quality brown spirits.”
Economic factors also play a role. With persistent inflation squeezing household budgets, many Canadians have become more price-sensitive. The combination of tariffs and unfavorable exchange rates has pushed American spirits into higher price brackets, making them less competitive against domestic alternatives.
The implications extend beyond business metrics. Cultural tensions between the neighboring countries have subtly influenced consumer choices, according to Dr. Sylvain Charlebois, director of the Agri-Food Analytics Lab at Dalhousie University.
“Food and beverage choices often reflect geopolitical sentiment,” Charlebois says. “We’ve documented similar patterns with other products during periods of bilateral tension. It’s not necessarily conscious boycotting, but consumers tend to express patriotism through purchasing decisions during times of international friction.”
American distillers, particularly mid-sized producers, are feeling the impact. Wilderness Trail Distillery in Kentucky reports Canadian orders down 32% from last year. “Canada was our growth market,” says co-founder Shane Baker. “We’ve had to pivot our export strategy toward Asia and Latin America to compensate.”
The situation has caught the attention of U.S. trade officials. In a recent statement, the Office of the U.S. Trade Representative noted that addressing barriers to American spirits exports remains “a priority in ongoing discussions with Canadian counterparts.”
Not all segments are suffering equally. Premium and ultra-premium American products have shown more resilience, suggesting that brand loyalty among high-end consumers remains somewhat insulated from broader market trends. Limited-edition releases from established distilleries like Maker’s Mark and Woodford Reserve continue to sell well despite higher price points.
Industry analysts predict the market may begin to stabilize by late 2024 if broader trade tensions ease. The upcoming U.S. presidential election could potentially reset bilateral trade discussions, though experts caution that deeply entrenched disputes over lumber and dairy are unlikely to resolve quickly.
For now, American distillers are adapting their Canadian strategies – emphasizing premium offerings, leaning into cocktail culture partnerships, and exploring co-branding opportunities with Canadian producers. Some are even considering establishing production facilities north of the border to circumvent tariffs altogether.
As diplomats and trade representatives continue their negotiations, the spirits industry serves as a potent reminder that international relations directly impact everyday consumer choices – sometimes measured in fingers of whiskey rather than handshakes between officials.
