Bourbon in the Crosshairs: How Trade Wars Have Become American Whiskey's Biggest Recurring Nightmare
Every few years, the conversation around American whiskey shifts from mash bills and barrel entry proofs to something far more uncomfortable: tariffs. Retaliatory duties, provincial bans, escalating counter-measures and emergency truces have turned global bourbon trade into a geopolitical chess match, one where the distillers — large and small — always seem to end up as the pawns. The question that haunts the industry isn't whether the next trade war will come for American whiskey. It's when, and how bad it will get this time.
The pattern has now repeated itself with enough regularity to qualify as a defining feature of the modern spirits business. What started as a steel-and-aluminum dispute in 2018 metastasized into a full-blown whiskey crisis that cost the industry hundreds of millions in lost export revenue. That crisis eventually cooled, only to roar back with even greater ferocity beginning in 2025, dragging new players — Canada, most devastatingly — into a fight that had previously centered on Europe. The numbers coming out of industry reports in 2025 and early 2026 are grim by any measure, and the outlook remains clouded by a web of suspensions, deadlines, and negotiations that can shift with a single presidential post on social media.
The Original Sin: 2018 and the Birth of the Bourbon Trade War
To understand why whiskey keeps ending up in the crosshairs of global trade disputes, it helps to go back to the origin point. In March 2018, the first Trump administration imposed Section 232 tariffs on steel and aluminum imports on national security grounds. What followed was swift and deliberately targeted. The EU, Canada, Mexico, and China all retaliated with tariffs on symbolic American products such as Harley-Davidson motorcycles, Levi's jeans, soybeans, and American-made bourbon and whiskey.
The targeting of bourbon was not accidental. Bourbon and whiskey were not selected at random. The states of Kentucky and Tennessee produce the overwhelming majority of these products, and Kentucky is the home state of then-Senate Majority Leader Mitch McConnell. Hitting bourbon was a way for foreign governments to inflict political pain on one of the most powerful figures in the U.S. Senate — a man who could either obstruct or facilitate trade negotiations. In addition to orange juice and Harley-Davidson motorcycles, bourbon was hit with a 25% tariff in retaliation for the tariffs the U.S. imposed on steel and aluminum imports.
The Immediate Fallout
The financial hit landed fast. U.S. whiskey shipments to Europe plummeted 21% between June 2018 and 2019, according to data from the Distilled Spirits Council. For individual companies, the losses were staggering. Campbell Brown, president of Old Forester and a fifth-generation member of the Brown family, was direct about the stakes: "We represent about 60% of all the whiskey that's exported from the United States," Brown said. "So we look at it as a tariff on Brown-Forman." Brown-Forman reported strong fiscal 2019 results overall, but EU tariffs were impacting Old Forester's bottom line — the company was taking a hit of roughly $10–$11 million a month.
The timing could not have been worse. Kentucky bourbon production reached its highest level of 1.7 million barrels in 2018 since 1972, according to the Kentucky Distillers Association. The industry had been riding a historic boom, expanding distillery capacity and cultivating export markets that had taken decades to build. Then the tariffs arrived and flattened what had been an extraordinary growth curve. Exports of American whiskey to the European Union tumbled 27% from 2018 to 2019.
Smaller producers felt the squeeze in a different but equally brutal way. Large distillers possess the capital and market reach to ride out disruptions caused by tariffs — built-in luxuries that most small producers don't have. For craft distilleries that had spent years cultivating a European following, the tariffs weren't just a business headache — they were potentially existential. While the direct impact of the tariff is measured by a percentage increase in prices, a greater concern is the potential loss of foreign markets. Whiskey is a quintessential American product, and producers believe changes in sentiment toward the U.S. will negatively impact the demand for their product.
China and Mexico Join the Fight
Europe wasn't the only front opening up in 2018. China levied a 25% tariff against hundreds of American products in April of that year, American whiskey among them. The Chinese market had been on a steep upward trajectory. China's international drinks market is estimated to be worth over $600 million. Although mostly dominated by Scotch whisky imports, the U.S. whiskey market in China was worth $8.9 million — a 1,200% increase from almost $1 million in 2001. That momentum was abruptly stopped. To the south, a 25% tariff introduced in Mexico on American whiskey led to an 8% drop in shares of Jack Daniel's owner, Brown-Forman.
The Boeing-Airbus Tangle and Scotch's Separate Misery
American whiskey's tariff troubles in this era were actually the product of two separate, overlapping disputes — a distinction that matters enormously for understanding just how tangled these trade fights can become. Alongside the steel-and-aluminum retaliation, a decades-old subsidy battle between Boeing and European aerospace rival Airbus was playing out at the World Trade Organization. In October 2019, the World Trade Organization settled the long-running subsidy dispute over Boeing-Airbus, ruling in favor of the United States, which was granted permission to apply $7.8 billion in retaliatory tariffs. The U.S. used that authority to slap a 25% tariff on Scotch whisky, among other European goods.
For Scotland's distillers, the damage was severe and measurable. The 25% tariffs on Scotch led to a 30% drop in exports to the U.S. in the 18 months through March 2021, the Scotch Whisky Association reported. These were two separate fights with two separate tariff mechanisms — yet both sides of the Atlantic's whiskey industry ended up bleeding simultaneously. The broader tally across both disputes told the story clearly: over the three-year period starting in 2018, American whiskey exports dropped 42%, while Scotch whisky imports were down by almost 38%.
A Brief Reprieve: The Biden Suspension and Its Limits
When Joe Biden took office, there was cautious optimism that the trans-Atlantic whiskey wars might finally cool. American whiskey had been targeted by the EU during the trade war that took place in Trump's first term, but an agreement was reached under Biden and the tariff was suspended in 2022. The suspension produced the kind of rebound the industry had been hoping for. Once the tariff was suspended, EU sales rebounded for American distillers.
But the relief was incomplete and time-limited. While Scotch could flow more freely to the U.S., the same wasn't true for bourbon in the UK. American whiskeys still faced a 25% tariff in Britain, under a different EU-U.S. trade dispute involving steel and aluminum. And the truce for American whiskey entering the EU came with an expiration date. The suspension was due to expire on March 31, 2025. The clock was always ticking.
During those relatively calmer years, U.S. distillers didn't sit idle — they stockpiled. U.S. spirits exports to the EU surged by 39%, fueled by concerns over the potential return of a 50% tariff on American whiskey imports in 2025. That front-loading strategy made 2024 look like a banner year on paper. U.S. spirits exports reached a record $2.37 billion in 2025 — though the decline of 3.8% that followed reflected the impact of ongoing trade friction, retaliatory actions, and broader economic headwinds.
2025: The Storm Returns, This Time With Canada
When the tariff truce expired and the Trump administration returned to the White House in January 2025, the industry's worst fears proved well-founded — and then some. The EU prepared to reinstate retaliatory tariffs, this time at a rate of 50%, double the previous levy. But the biggest shock came from America's closest neighbor. The dispute began in early 2025, when the Trump administration imposed new tariffs on Canadian goods and Canada retaliated.
Canada's Shelves Go Dark for American Bourbon
Canada's response was unlike anything the American spirits industry had faced before. Rather than simply raising import duties — which distillers can at least strategize around — Canadian provinces moved to remove American products from shelves entirely. Government-run liquor stores immediately started pulling American-made products off the shelves, including bourbon and wine. The most impactful shift was not the short-lived 25% federal tariff but the implementation of provincial-level sales bans — a move from a tariff-based dispute to a more severe non-tariff barrier that directly blocked market access for U.S. spirits.
The numbers that followed were catastrophic. The effect of Canada's boycott was swift, cutting off the biggest export market for American whiskey and wine. In the second quarter of 2025, exports of U.S. spirits to Canada tumbled 85%, according to DISCUS. By year's end, the full-year picture was only marginally less ugly: exports to Canada plummeted by more than 70% since the start of the country's ban on American spirits in March 2025.
The provincial ban had a deeply personal quality to it that a tariff doesn't. A tariff raises prices and reduces competitiveness; a ban simply removes American whiskey from the consideration set entirely — out of sight, out of mind, and eventually, out of habit for consumers who simply move on to domestic alternatives. As one Canadian whisky writer observed, "There is very much a 'buy Canadian' movement up here." For American whiskey producers, the first priority is getting bourbon, rye and other U.S. spirits back onto Canadian shelves. But after more than a year of tariffs and retaliation, getting the bottles back may be easier than getting all of the customers back.
The Escalation That Wouldn't Stop
Rather than de-escalating, the Canada situation grew worse through 2025. After negotiations between Trump and Canadian Prime Minister Mark Carney failed to produce an agreement, a new 50% U.S. tariff on select Canadian products took effect August 22. Saskatchewan Premier Scott Moe subsequently announced a 50% levy on American alcohol. Then the fight lurched into genuinely unprecedented territory: on September 8, Trump went further, signing a proclamation that would bar certain Canadian alcoholic beverages from entering the United States beginning September 29.
The economic consequences for individual producers were tangible and severe. In December, Jim Beam announced it was shutting down bourbon production at its main Kentucky distillery amid the severe dip in exports. When one of the most recognizable bourbon brands in the world is idling production lines, the scale of the disruption is impossible to dismiss as a rounding error. "The decline of U.S. spirits exports in 2025 underscores the industry's vulnerability to uncertainty in the global trade environment and the vital importance of restoring the permanent return to zero-for-zero tariffs on spirits products," said DISCUS president and CEO Chris Swonger.
Europe's 50% Threat and the Diplomatic Scramble
While the Canada situation was absorbing attention, Europe was simultaneously ratcheting up its own pressure. EU officials fought back against new U.S. steel and aluminum tariffs by declaring a 50% excise on American whiskey and other products. One week after the imposition of U.S. tariffs, Trump threatened a retaliatory 200% tariff on EU alcohol imports in response to the EU's proposed 50% tariff on American whiskey. The escalating rhetoric was dizzying and destabilizing — for distillers trying to price products, plan shipments, and negotiate distribution contracts across Europe, the uncertainty was as damaging as the tariffs themselves.
The EU's proposed 50% rate was eventually dialed back and repeatedly delayed. The 30% tariff was initially due to be implemented on August 5, 2025, but was first suspended for six months until February 5, 2026, and subsequently pushed back until August 6, 2026. Uncertainty remains for U.S. distillers with the looming threat of the EU's proposed 30% tariff on American spirits, which is currently suspended through August 2026. The industry has been living under the shadow of that deadline since the Biden-era truce expired, and the repeated suspensions — while welcome in the short term — have denied American distillers the stable trading environment they need to make long-term investments.
The Front-Loading Distortion
The threat of impending tariffs created a strange market dynamic that distorted the export numbers in both directions. When distillers anticipated that tariffs were coming, they rushed product to market ahead of the deadline — a strategy known as front-loading. Exports of American whiskeys to the EU fell by 35% to $454 million in 2025 — a likely result of American whiskey producers front-loading exports to the EU in late 2024 in response to the threat of retaliatory tariffs. The 2024 export record, in other words, was partly borrowed demand. 2025 paid back the debt.
This dynamic makes it genuinely difficult to assess the health of American whiskey's export business in real time. A record year can mask impending collapse; a terrible year can partially reflect strategic inventory moves made twelve months earlier. Tariffs amount to a tax, which whiskey producers can either absorb in reduced profits or pass along to customers through higher prices — and risk losing market share in highly competitive markets. Neither option is good, and neither is sustainable over a multi-year period.
Scotch, Irish Whiskey, and a Royal Intervention
The trade war's geography shifted in unexpected ways when it came to Scotch and Irish whiskey. Following a visit from King Charles to the White House, Trump announced the 10% baseline tariff would be removed on Scotch and Irish whiskey, and that restrictions would be loosened on Scotland's ability to work with Kentucky on whisky and bourbon. Trump's own explanation was characteristically candid: "The King and Queen got me to do something that nobody else was able to do, without hardly even asking," Trump said on Truth Social.
The practical rollout, however, was complicated. The United States removed its additional tariff on UK-produced whisky in July, restoring tariff-free access for Scotch and whisky produced elsewhere in the United Kingdom. That left Irish whiskey in an unusual position — whiskey produced in Northern Ireland received the UK exemption, while whiskey from the Republic of Ireland remained subject to a 10% U.S. tariff. The border between Northern Ireland and the Republic, already one of the world's most politically sensitive lines, was now a whiskey customs boundary as well. During a September 13 visit to Ireland, Trump said he would remove the 10% tariff after Irish Taoiseach Micheál Martin, golfer Shane Lowry, and others raised the issue with him. A date for the change had not yet been announced.
India: The Silver Lining Nobody Expected
Amid the wreckage of established markets, a different story was quietly developing in the world's most populous country. India is the world's largest whiskey market by volume, but steep tariffs have historically kept bourbon and other American whiskeys on the margins. Those barriers began shifting in early 2025. India reduced its tariff on bottled bourbon from 150% to 100% in February 2025. That's still a prohibitive number by any reasonable measure, but movement in the right direction from a country that had been effectively closed to American whiskey for decades.
American whiskey exports to India totaled just $8.8 million in 2024, but with traditional markets such as Canada struggling, the world's largest whiskey market represents a potentially important source of future growth. The opportunity in India is enormous in theory — the country consumes more whiskey by volume than any other nation on earth — but converting that potential into meaningful sales requires sustained diplomatic progress and continued tariff reductions. Neither is guaranteed in the current global trade environment.
The Broader Export Picture: Winners, Losers, and What the Numbers Actually Tell Us
Strip away Canada and Europe, and the story of American whiskey's global reach in 2025 looks somewhat different. Growth in markets outside Canada and the EU helped offset some of the losses in 2025. Exports to the rest of the world rose 13.2%, led by gains in Brazil, the United Kingdom, Australia, and emerging markets. The top five markets for U.S. spirits in 2025 were the EU ($1.2 billion), the UK ($153 million), Australia ($138 million), Mexico ($127 million), and Canada ($89 million). These markets accounted for 72% of U.S. spirits exports.
Yet the headline numbers told a story of overall decline. U.S. spirits exports fell 3.8% to $2.37 billion in 2025, according to DISCUS, while American whiskey exports fell 19% to $1.08 billion. Perhaps the most telling data point was a threshold that nobody in the industry wanted to cross: American whiskey exports fell below 50% of total U.S. spirits exports for the first time since 1996. Bourbon and its relatives had defined American spirits exports for a generation. Losing that majority share — even temporarily — marks a significant symbolic and commercial setback.
The Human Cost: Craft Distillers and the Rope-a-Dope
While the macro numbers are alarming, the ground-level realities for smaller producers are often worse. Big distillers have legal teams, hedging strategies, and reserve capital to weather years of disruption. Craft producers generally have none of those cushions. Sonat Birnecker Hart, president and founder of Koval Distillery in Chicago, spoke to Bloomberg about how the tariffs put a tight squeeze on her business and other craft distilleries that rely on global trade.
Becky Harris, co-founder and master distiller of Catoctin Creek in Purcellville, Virginia, framed the situation in historical terms that get to the root of the frustration. "It's important to bring up those tariffs because people don't remember them," Harris said. "But these newer tariffs are just the latest part of a 'rope-a-dope' the distilling industry's been dealing with for nearly a decade." That phrase — rope-a-dope — captures the experience precisely: repeated blows absorbed, with the hope that you're still standing when the fight finally ends.
The Kentucky Distillers' Association had seen enough to recognize the pattern clearly. The industry group said the newest trade conflicts feel like deja vu, noting that it has long sounded the alarm that tariffs and retaliatory levies would wreak havoc on the spirits industry. With record aging inventories and a domestic market where younger adults are drinking less, the external pressure of tariffs compounds an already complicated business environment. The industry had massive inventories of aging whiskeys that would someday reach the market. In Kentucky, a record 14.3 million barrels of bourbon were aging, the Kentucky Distillers' Association reported — inventory awaiting bottling at a time when younger adults appear to be drinking less alcohol.
Why Whiskey Is Always the Target
The recurring pattern of bourbon ending up in the crosshairs of trade disputes is not coincidence. It is strategy. Bourbon has been hit with retaliatory tariffs as a deliberate act of political messaging — the EU was looking to make a statement just as much political as economic. The concentration of bourbon production in a handful of politically significant states makes it an ideal leverage instrument. Kentucky alone supplies the vast majority of the world's supply. Tariffs on bourbon don't just hurt distillers — they hurt corn farmers, barrel cooperages, truckers, distributors, and the tourism infrastructure that has grown around bourbon country over the past two decades.
For the Kentucky and Tennessee economies, the cultural and economic significance of whiskey production makes the current trade situation especially poignant. Kentucky produces about 95% of the world's bourbon, and Tennessee is home of Jack Daniel's — the world's most popular Tennessee whiskey. When foreign governments want to send a message to Washington, targeting that geographic concentration sends the message to exactly the right congressional districts.
The EU's retaliatory tariff caused American whiskey exports to the EU to plunge 20%, costing distillers more than $100 million in revenue from 2018 to 2021, the Distilled Spirits Council reported. These are not abstract economic statistics — they represent barrels that didn't get filled, workers who didn't get hired, and small-town economies that didn't get the tax revenue they were counting on.
What the Industry Is Actually Asking For
The spirits industry's trade associations have been remarkably consistent in what they want, even as the political environment around them swings wildly. Despite the escalating restrictions, major spirits trade groups generally aren't asking governments to put more tariffs on foreign whiskey. DISCUS has instead called for a return to the "zero-for-zero" system that allowed spirits to move between major markets without tariffs.
"The decline of U.S. spirits exports in 2025 underscores the industry's vulnerability to uncertainty in the global trade environment and the vital importance of restoring the permanent return to zero-for-zero tariffs on spirits products," said Swonger. "When American spirits compete on a level playing field, exports grow, jobs are created and local economies thrive." That argument isn't ideological — it's practical. The free-trade framework that existed prior to 2018 produced record export growth and made American whiskey a genuinely global category. Global demand for bourbon resulted from decades of negotiating free-and-fair trade deals that allowed American whiskey producers to pay no tariff on exports into the European Union.
The Outlook: Suspended Deadlines and Unanswered Questions
As of mid-2026, the situation remains in flux in ways that are maddening for anyone trying to run a distillery. The EU's proposed 30% tariff on American spirits — the successor to the threatened 50% levy — has been suspended twice already and currently extends through August 2026. Canada has partially reopened, with some provincial bans lifted, but the broader market access Americans enjoyed before 2025 remains a distant memory. Only two provinces, Alberta and Saskatchewan, have lifted the ban.
The outlook for 2026 remains uncertain due to ongoing trade disputes, the threat of retaliatory tariffs from the EU, and domestic economic headwinds. There is no clear path back to the zero-tariff environment that produced the bourbon boom, and the diplomatic machinery that might deliver one is grinding along on its own unpredictable schedule. Scotch whisky secured relief through a royal visit. Irish whiskey got a promise made on a golf course. American bourbon's fate may similarly hinge on moments that have nothing to do with the merits of trade policy.
While the tariff crisis may be over — for now — the ramifications are still sending shockwaves through the industry. The distillers who survived the last cycle did so by diversifying into new markets, cutting costs, building domestic sales, and absorbing losses that would have shuttered less resilient operations. Many are doing the same today. But the deeper problem — that American whiskey has become a default bargaining chip in trade disputes it had no hand in creating — has not been solved. Until the spirits industry is taken off the table as a retaliatory target, the next round of this fight is always just one steel tariff away.
