Bourbon industry in crosshairs of U.S.-Canada trade war

LOUISVILLE, Kentucky — Distilleries in the heart of America’s bourbon industry are finding themselves in the crosshairs of a brewing trade war between the U.S. and Canada.

Alcohol made in the U.S. is being removed from store shelves in Canada in retaliation for tariffs placed on its products by the Trump administration.

It’s also leading to canceled shipment orders and stalled liquor agreements with potential trading partners, some Kentucky bourbon businesses say.

The family-owned Michter’s Distillery in Louisville has already lost $115,000 in canceled bourbon shipment orders to Canada, its largest foreign market as liquor stores in most Canadian provinces have been asked to remove products from their shelves.

“That’s the reality of it,” said Andrea Wilson, chief operating officer of Michter’s. “We would prefer to see less tariffs than more.”

Earlier this month, Trump announced a 25% tariff on goods imported from Canada and Mexico — two of the country’s largest trade partners — before postponing it amid trepidation of a broader trade war.

On Tuesday, Trump amplified his tough tariff talk, saying he would double the tariffs imposed on steel and aluminum imported from Canada.

The threat came one day after Ontario’s premier, the leader of Canada’s most populous province, announced it would charge 25% more for electricity to 1.5 million Americans.

Kentucky’s bourbon industry pours about $9 billion into the local economy annually, according to the Kentucky Distillers’ Association.

The state produces about 95% of the bourbon sold in the world, the association estimates.

While data on the tariffs’ effects is unavailable, U.S. consumers likely won’t see a price increase on bourbon for at least a few months, said Marten Lodewijks, president of the U.S. division of the beverage industry data firm IWSR.

But Kentucky distilleries could feel an immediate pinch if some of their shipments to Canada are being cancelled, he said.

Wilson said she fears her business could face further losses if the tariff war continues.

“If we’re not selling to our largest export market, that’s a significant impact to our business, and it’s very sad for us, because we have friends, we’ve built relationships in that country for a long time,” she said.

Black-owned Brough Brothers Distillery in Louisville is having its own set of problems caused by the tariff war.

The company was in the midst of negotiating to sell its products in Canada for the first time, but discussions abruptly ended when the trade war started.

The deal fell through “as soon as the tariffs were announced,” CEO Victor Yarbrough said.

“Literally, we’re in the middle of expansion. Everything’s been suspended, they don’t have the ability to purchase,” Yarbrough said, adding his plans for 2025 were to also ship alcohol to France and the United Kingdom.

Now he’s considering sending his products to South Africa or Brazil, but Canada would have been the bigger market.

“I’m just like, how can we help get back to square one? How can we facilitate good, neighborly, you know, relationships that we’ve been having?” he asked.

Fawn Weaver, founder of Black-owned Tennessee whiskey brand Uncle Nearest, had her alcohol products pulled off the shelves in Canada, but said she was already bracing for the fallout.

Weaver, who contends a tariff war could be predicted during the presidential campaign, said the tariffs mean her business can’t be as aggressive in the global market for now.

“As an independent brand, I can’t afford those tariffs. I can’t afford to absorb it, and I can’t pass it on to the consumers,” she said. “It could be argued that this is exactly what the current administration wants — for all of us to bring in our business in the U.S.”

She added: “We already knew coming into this, Trump was very clear in what he was going to do, even though we didn’t know where the tariffs would hit.”

Kailani Koenig and Maggie Vespa reported from Louisville, Deon J. Hampton from Denver and Bracey Harris from Mississippi.