Bourbon's Global Crisis: How Tariffs, Trade Wars, and America's Fading Soft Power Are Hammering the Spirit Abroad
For the better part of two decades, bourbon was on a relentless upward march. The spirit born in Kentucky's limestone-watered hollows became a global phenomenon — poured in Tokyo cocktail bars, stocked in Edinburgh bottle shops, sipped neat in Copenhagen and Berlin. Distilleries large and small invested in export infrastructure, hired international sales teams, and placed ambitious bets on European and Asian consumers who were hungry for authentic American culture in a glass. That era appears to be over, at least for now, and the reversal has been brutal.
Exports of American whiskey fell 19 percent in 2025 to $1.1 billion, according to the Distilled Spirits Council of the United States. The collapse was not spread evenly across the globe — it hammered the industry's most critical markets simultaneously. American whiskey sales to Canada fell 57 percent to just $33 million, exports to the EU were 35 percent lower, and US distillers still face the uncertainty of a potential 30 percent EU tariff on their spirits from August. Exports of American whiskey to Japan fell 28 percent, to $57 million. These three markets — Canada, the EU, and Japan — were precisely the ones the industry had spent years cultivating.
American whiskey accounted for just 45 percent of total exports in 2025, the lowest share since 1996. That single statistic puts the scale of the setback in stark relief: the industry has effectively been knocked back thirty years in terms of its global footprint in a single calendar year.
The Hard Numbers Behind a Hard Year
The downturn comes after President Donald Trump's "Liberation Day" tariffs were rolled out, a policy shift that increased costs for the industry and triggered retaliatory measures from key trading partners. But the damage was not simply a matter of import duties making bourbon more expensive on foreign shelves. The mechanisms were more varied and, in some cases, more visceral.
The two biggest negatives in the year were Canada's ban on selling American-made spirits, which began just over a year ago when President Trump threatened to "annex" Canada, and the previous year's front-loading of shipments to the EU ahead of potential retaliatory tariffs. Both dynamics skewed the 2025 numbers downward in ways that complicate a clean reading of what is structural damage versus what is a one-time distortion. European importers who loaded up on bourbon inventory in late 2024 simply didn't need to reorder in 2025 — the decline on paper reflects full warehouses as much as it does vanished consumer demand. Canada is a different story altogether.
Exports to Canada fell a staggering 70 percent from March through December 2025. In December 2024, Ontario Premier Doug Ford famously ordered retailers, bars and restaurants to stop selling American alcohol products. Canada removed its retaliatory tariff on U.S. spirits on September 1, but the majority of provinces continue to ban American spirits from their shelves. For Kentucky distillers, Canada was not a marginal afterthought — it was a mature, enthusiastic, and geographically close market with deep familiarity with American whiskey culture. Losing it near-overnight was a gut punch.
Kentucky has an all-time high of 16.1 million aging barrels of bourbon in its warehouses, and because these barrels are taxed by the state, Kentucky distillers paid a "$75 million tab in aging barrel taxes this year, a 27% increase from 2024 and an astronomical 163% increase over the last five years alone." That warehouse tax burden, layered on top of export collapse and softening domestic demand, creates a financial squeeze that is forcing distillers into painful decisions about production rates, staffing, and the scope of their international ambitions.
The Ripple Effect on Iconic Brands
Jack Daniel's, Old Forester, and Woodford Reserve, all owned by parent company Brown-Forman, have felt the pain, as the company previously announced it was "laying off about 650 employees, or 12% of its workforce, in the face of declining demand." Several other whiskey brands, including Garrard County Distilling Co. in Kentucky and Uncle Nearest in Tennessee, have been placed into receivership in 2025.
Jim Beam, one of the most recognizable names in bourbon's history, decided to close down its distillery, which had been in regular operation since Prohibition. Roots of the brand go back to 1795, when Jacob Beam sold his first barrels of whiskey in Kentucky. After Prohibition ended, James Beauregard "Jim" Beam rebuilt the family distillery in Clermont in 1935. The decision to halt production at such a storied facility underscores just how serious the current pressures have become — this is not a boutique craft operation trimming its sails but one of the foundational institutions of American distilling.
There is, as author Reid Mitenbuler put it, "something kind of ironic about this really iconic American product being hurt by policies that purport to be bringing America back or saving America."
Small Craft Distillers: Caught in the Crossfire
If the damage to large legacy brands has been jarring, the experience of smaller independent distillers has been even more immediate. They lack the financial reserves, the brand recognition in untapped markets, and the lobbying muscle to absorb prolonged disruption. For them, international sales are not a bonus revenue stream — they are often the margin between growth and stagnation.
Thomas Bard, co-founder and CEO of Kentucky's Bard Distillery, describes a European market that has effectively gone dark. "There is absolutely no movement in our EU market," he says. "Due to the continued volatility regarding tariffs and other geopolitical 'disagreements,' there seems to be no appetite for European importers to bother with, or take chances on, bringing in small craft spirits to their country." For Bard, the assessment is stark: that market is effectively dead for now, and rebuilding from scratch is a project for a future that remains undefined.
With a new distillery set to open soon, the makers of Brough Brothers bourbon in Kentucky were ready to put their business plan into action, looking to ramp up whiskey production and break into lucrative new markets in Canada and Europe. But the on-again, off-again threat of tariffs disrupted those plans. Efforts by the Black-owned distiller to gain a foothold in Canada are on hold, as are plans to break into Germany and France. CEO Victor Yarbrough called it "extremely frustrating."
Judy Hollis Jones, president and CEO of Buzzard's Roost in Louisville, which sells to two provinces in Canada and has been looking to expand, put the planning problem clearly: "The issue for us is long-term planning, and a postponement does nothing for us in long-term planning except leaves it still up in the air."
This is a critical point that tends to get lost in the broader tariff debate. Bourbon is not a product you can simply switch on and off. Distillers commit capital years in advance, filling barrels with new make spirit that won't be ready to sell for four, six, or eight years. Kentucky produces 95 percent of the world's bourbon supply, and for an industry that has to plan well into the future based on aging its whiskey products, such angst is widespread. The unpredictability of trade policy is not merely an inconvenience — it makes the fundamental business model of aging whiskey deeply difficult to execute.
Soft Power: Bourbon's Hidden Asset, Now a Liability
The tariff story, as damaging as it is, may ultimately prove to be less consequential than the subtler erosion happening in parallel: the degradation of bourbon's cultural capital abroad. This is the dimension that most trade analysis misses entirely, and it may be the harder problem to solve.
For decades, bourbon carried with it a set of associations that were deeply appealing to international consumers. It stood for a specific vision of American identity — rugged independence, frontier heritage, craftsmanship rooted in a particular place. Olivier Ward, a U.K.-based consultant and founder of Everglow Spirits, explains the mechanics of this phenomenon clearly. "Soft power is the cultural pull of a country, the desirability of its lifestyle, or just the emotional association that people project onto products of a place," he says. "Bourbon has always traded off that. There is a definite reality that bourbon is both cultural and very much linked to America" with associated values like freedom and rebellion. "Those associations have helped justify some of bourbon's premium pricing and desirability."
The problem is that soft power is not a fixed asset. It fluctuates based on how a country is perceived at any given moment on the world stage. Ward describes this as a two-way dynamic: the same cultural associations that once made bourbon aspirational abroad are now creating friction. "That rejection, or at least the feeling of rejection, is friction," Ward says. "That's disastrous when you're already facing all of the hard-power problems" like tariffs, inflation, and the like. When a consumer who once romanticized American culture begins to feel personally dismissed or antagonized by American foreign policy, that romanticization turns into skepticism — or outright aversion.
The Horn Effect: When Associations Turn Toxic
Andrea Fujarczuk, a distiller and professor at Niagara University doing doctoral research into the association between brand and place among whiskey consumers, has a framework for what is happening to bourbon's identity abroad. Marketers are familiar with the halo effect — the way a respected country of origin can elevate perceptions of a product beyond what its intrinsic qualities alone would justify. Think of German engineering or Italian leather as shorthand for quality that extends automatically to products bearing those origins. Bourbon has long benefited from a version of this, trading on American mythologies of independence, authenticity, and a certain kind of rugged cool.
But there is an inverse to the halo effect, which Fujarczuk calls the horn effect. "That's when there is a poor association with something — what could have happened in terms of that political association," she explains. "Can you turn that around? Yes, but you may not be able to undo all the damage already done." The horn effect does not require a consumer to make a conscious political decision every time they reach for a bottle. It operates at the level of ambient association — a vague discomfort, a slight hesitation, a preference for reaching for something that doesn't carry the weight of an uncomfortable geopolitical story.
Fujarczuk frames the political factor as a risk that consumers are now consciously weighing in ways they never had to before. "The one thing that no one is really talking about is the inherent risk that is now associated with bourbon — that political factor," she says. "Now consumers are looking at purchasing a bottle of bourbon as a risk, not because of the quality of it, but because of the political association."
What European and Nordic Consumers Are Actually Doing
Mark Jennings, a consultant and whisky writer based in Sweden, has been watching consumption behavior shift in real time across Germany, Sweden, and the broader Nordic region. His observations are not based on a single consumer survey or a temporary dip in one retailer's data — they reflect a pattern he has tracked for months. "What I'm noticing in Germany, Sweden, and the Nordics is people are just not renewing their purchase of bourbon unless they absolutely have to. They're choosing something else," Jennings says. "There's a lot of, let's say, soft nationalism that's coming in." He notes that locally made whiskies — Scandinavian single malts, German grain whiskeys — are gaining both attention and active consumer support as alternatives to American imports.
Fujarczuk reinforces Jennings's observations with a structural argument. "Consumers are being more conscious of where they're putting their hard-earned money and that includes where products are coming from," she says. "People are intentionally buying local and national products. This global trade war is incentivizing people to become even more ethnocentric. The longer it happens, the more likely they will be to continue doing that." This is not simply a political protest — it is a habit formation process. Consumers who switch to a local alternative out of political conviction may discover they enjoy it, and the habit calcifies regardless of whether the original political irritant is eventually resolved.
Higher prices abroad are pushing international buyers toward non-U.S. spirits, threatening long-term market share for American brands. The combination of price pressure and sentiment shift means bourbon faces a dual disadvantage in key markets: it costs more and it feels less appealing at the same moment.
A Politically Charged Purchase Decision
Both Fujarczuk and Jennings emphasize that the current political environment feels uniquely personal to many people in allied countries — more so than previous periods of American unilateralism. President Trump's upending of longstanding trade agreements, his rhetoric toward countries like Canada and Denmark, and the perception of the U.S. as an unreliable partner have translated into genuine emotional responses that are shaping purchasing behavior.
Along with the turmoil and uncertainty over tariffs, bourbon makers and other U.S. firms trying to do business in Canada are confronting public relations challenges still reverberating from the president's blunt-force "America First" approach to international relations. With Canadian hockey fans booing the U.S. national anthem and some liquor stores north of the border clearing American spirits from their shelves even before there's clarity over tariffs, the cultural dimension of the rupture is impossible to ignore.
Jennings himself has halted personal travel to the United States as a form of individual protest, declining work opportunities and personal trips alike. "That has meant me declining articles and opportunities. It has a financial impact to the work that I do, and a personal impact," he says, acknowledging the symbolic scale of a one-person stand while noting that it nonetheless represents a real withdrawal of commerce and goodwill. There is likely a far larger number of European whiskey enthusiasts making smaller, quieter versions of the same calculation every time they visit a bottle shop.
The Structural Timing Problem
One of the most corrosive aspects of the current situation is its timing. For roughly two decades, as bourbon's domestic market boomed, American distilleries kept their focus primarily at home. The growth was so strong — the secondary market for allocated bottles so frenzied, the new consumer interest so robust — that deep investment in international market development felt unnecessary. International was the opportunity of tomorrow, not the urgency of today.
Millennials and Gen Xers fueled a boom in the spirits industry over the last 25 years, helping to drive up prices, but they're drinking less as they've gotten older, and Gen Z isn't drinking as much as those generations have. A lot of whiskey companies had been looking to expand their reach in overseas markets as demand tapered off in the U.S., and the trade war could drive some producers out of business entirely. The window of international opportunity that should have been a pressure-relief valve for domestic oversupply has slammed shut precisely when it was most needed.
Dave Schmier, founder of Proof and Wood, is candid about the structural reality bourbon faces abroad. "It's been an uphill battle to bring American whiskey to other marketplaces," he says. "In a lot of markets, with some exceptions, American whiskey isn't yet a thing. People aren't missing it." Schmier has evaluated export opportunities in markets like Singapore, concluding that "there's no clamoring for American whiskey" there, even before factoring in the political headwinds. Industry leaders say the current trade environment has made planning more difficult. "In this environment, which is very, very fluid, predictability and forecasting becomes even more challenging," said Michael Bilello, president and CEO of the American Whiskey Association.
Exports remain a critical path forward, especially amid a slowdown in domestic sales and high inventory levels. As DISCUS President and CEO Chris Swonger said, "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."
U.K. as a Relative Safe Haven — With Caveats
Not every market is in full retreat. Dawn Davies, commercial buying director at The Whisky Exchange — one of the U.K.'s most influential spirits retailers — describes a bourbon market that is flat rather than collapsed. "It's probably the loyal drinkers who keep on drinking — they know they like it, they're going to keep buying it, whereas before we were seeing a much stronger growth trajectory on American whiskey," she says. Davies positions the U.K. as a more forgiving environment than mainland Europe, pointing to the country's long-standing cultural and political relationship with the United States as a buffer against the kind of active rejection playing out further east. The U.K. market, she suggests, will be characterized more by ambivalence than animosity — but ambivalence is still a long way from the growth story the industry needs.
Despite the declines in Canada and the EU, exports to other global markets grew 13.2%, with gains reported in Brazil, the United Kingdom, and Australia. These pockets of growth matter and they are not trivial. New Riff Distillery's chief sales officer, Rawnica Dillingham, responded to the Canadian collapse by aggressively pivoting toward markets like Australia, South Korea, and the EU, effectively restructuring the company's international strategy in real time. The approach requires more resources, more patience, and a willingness to treat markets as genuinely distinct rather than as uniform outlets for an American product.
Rethinking the Export Pitch
For Dillingham and New Riff, the forced reassessment of international strategy has led to a more fundamental question about what bourbon actually represents when sold beyond American borders. The traditional pitch — bourbon as an ambassador for American values, American history, American freedom — is the very thing that is now creating friction in parts of the world where American policy feels threatening rather than inspiring.
"We have to be the brand that comes back to why we drink bourbon in the first place," Dillingham says. "That isn't as a way to take American culture and put it into other cultures. It's a way to take a great spirit and drive community around it wherever that community is." This is a meaningful reorientation. Rather than leading with American identity, distillers who want to build durable international businesses will need to lean into the sensory and social qualities of bourbon itself — grain, wood, time, craft — and let the liquid do the work that the flag can no longer be relied upon to do.
Davies at The Whisky Exchange pushes distillers toward what she calls a "boots-on-the-ground" strategy — one that means hiring local market experts, understanding regional consumer preferences, and investing in long-term relationship building rather than expecting American prestige to pull consumers in without effort. Those willing to make that investment, she argues, are the ones who will retain and grow their footprint even in a difficult political climate.
Historical Echoes and Long-Term Scars
Bourbon has always been on the front lines of any trade war — countries have targeted the product in order to send a message to Kentucky Senator Mitch McConnell, since his state produces so much of it. Trade conflicts during the first Trump administration saw both the EU and the U.K. impose heavy tariffs on American whiskey, choking export growth during what should have been a period of peak expansion. That episode also seeded the pattern of front-loading shipments ahead of anticipated tariff deadlines — a practice that distorted the 2024-to-2025 data and now makes it harder to read the underlying consumer trends clearly.
The Kentucky Distillers' Association says the newest trade conflicts feel like deja vu. The industry group has long sounded the alarm that tariffs and retaliatory levies would wreak havoc on the spirits industry. What is different this time is the combination of factors landing simultaneously: the tariff disruption, the oversupply crisis, the demographic shift away from spirits, and now the soft-power erosion that has no legislative fix. Previous trade wars were largely resolved by the stroke of a pen, with markets recovering once tariffs were lifted. The cultural damage now accumulating in Europe and Canada is more diffuse and may prove significantly more durable.
Kentucky Democratic Gov. Andy Beshear said the president's zig-zagging tariff policy is hurting the American economy and will lead to higher consumer prices while disrupting business. "It's not just the imposition of tariffs, it's this month-to-month, 'I may do it to you at any moment' policy," Beshear said. "You can't create stability." From a distiller's perspective, that instability is arguably more damaging than a fixed, predictable tariff, because at least a known tariff rate can be factored into pricing and planning. Perpetual uncertainty makes every major decision — a new barrel program, an international distributor agreement, a export marketing investment — a bet on conditions that could change completely within weeks.
What Recovery Actually Looks Like
The path back to bourbon's pre-2025 international trajectory, assuming one exists, is going to be long and require structural changes in how the industry approaches global markets. The old model — waiting for the bourbon boom to do the heavy lifting, then tapping international demand from a position of strength — is no longer available. The new model requires earlier, deeper, and more culturally sensitive investment in foreign markets, executed by people who understand those markets rather than by American salespeople projecting American assumptions onto foreign consumers.
It also requires the industry to advocate loudly and consistently for stable trade policy. As DISCUS has argued, "stable, tariff-free trade and expanding market access abroad are essential to ensuring continued growth for the U.S. spirits sector." That argument has been made before, loudly and repeatedly, with limited lasting effect on a White House that views tariffs as a tool of geopolitical leverage rather than a cost to specific American industries. The bourbon industry's challenge is to make the political and economic consequences of trade disruption impossible for policymakers to ignore — a challenge made harder by the fact that the damage is distributed across hundreds of distilleries rather than concentrated in a single, easily visible crisis point.
The soft-power problem is even harder to legislate away. Cultural goodwill is rebuilt through time, through the steady accumulation of positive experiences, and through a foreign policy posture that generates more admiration than resentment. None of that is within the bourbon industry's direct control. What distillers can control is the quality of the liquid in the barrel, the authenticity of the stories they tell, and the seriousness with which they treat foreign consumers as partners rather than passive recipients of American culture. That, at minimum, is where the recovery has to start.
The industry had already been in a bind even without taking into account the trade war. The convergence of cyclical correction, demographic change, inventory glut, and geopolitical disruption means this is not a crisis that will resolve itself when the political winds shift. The distillers who navigate it most effectively will be those who use this uncomfortable moment to build something more durable than the boom-cycle optimism that preceded it — a genuine international presence grounded in craft, culture, and community, wherever that community happens to be found.
