SPECIAL EDITION: "...stop buying American liquor from “red states..." Oh, Canada, Canada, Canada..

Gideon P. Tailor

Bourbon just took a hit, and not from a bad batch. In response to Trump’s 25% tariffs on Canadian goods, British Columbia is pulling all American spirits from Republican-led states off liquor store shelves. Premier David Eby didn’t mince words, calling the tariffs “a declaration of economic war against a trusted ally and friend” (Daily Beast).

Ontario has followed suit, with Premier Doug Ford directing the Liquor Control Board of Ontario to stop selling American liquor entirely (Yahoo News Canada). Nova Scotia has also jumped in, barring U.S. spirits from government-run stores. While these moves have been framed as responses to Trump’s tariffs, they also serve a dual purpose—encouraging consumers to shift their purchases toward Canadian-made spirits.

The financial impact of these actions could be severe for U.S. distilleries. Canada has long been a major market for American whiskey, with over $262 million in U.S. spirit exports flowing north annually (Felene Vodka). Bourbon makes up a significant portion of that, particularly from Kentucky and Tennessee, two states that have traditionally leaned Republican. Cutting off that revenue stream could disrupt supply chains, affect employment in the distilling sector, and push smaller operations—especially those without global distribution networks—into financial distress.

The U.S. whiskey industry has been here before. In 2018, the EU imposed a 25% retaliatory tariff on American whiskey in response to Trump’s steel and aluminum tariffs. Over the next two years, U.S. whiskey exports to the EU dropped by 37%, with Kentucky alone seeing a $177 million decline in sales to Europe (Distilled Spirits Council). If the Canadian bans and tariffs persist, the impact on American distilleries could mirror the EU experience, especially given that Canada ranks as the second-largest export market for U.S. spirits.

Meanwhile, the Trudeau government has taken broader measures, rolling out retaliatory tariffs on a variety of U.S. products totaling $155 billion (The Guardian). However, Trudeau himself has not explicitly referenced whiskey or bourbon in his statements. His messaging has instead focused on supporting Canadian businesses, allowing provincial leaders to take the more aggressive stance on liquor bans.

American whiskey producers are now faced with tough choices. Some may seek to reallocate their products to other international markets, but such a transition is neither quick nor simple. European markets are still rebounding from the previous round of tariffs, and emerging markets like China and India have complex import regulations. Meanwhile, domestic overproduction could lead to price instability, forcing distilleries to either slow production or accept lower margins.

These trade barriers come at a time when bourbon sales have been booming. The global bourbon market was valued at $7.8 billion in 2021 and is projected to reach $12.8 billion by 2031, growing at a rate of 5% annually (Allied Market Research). However, the vast majority of that growth has been driven by premium and export sales, meaning any sustained drop in international demand could disproportionately hurt the higher-end sector of the market.

The situation underscores how deeply bourbon and whiskey are intertwined with international trade policy. The industry’s growth has largely been built on global demand, and disruptions from tariffs and trade wars threaten to undo years of expansion. If these provincial bans and counter-tariffs persist, U.S. whiskey producers could be looking at a protracted struggle to maintain their foothold in one of their most lucrative export markets.