The American Spirits Industry: A Bitter Trade War Hangover
The U.S. spirits industry, particularly the beloved bourbon and whiskey sector, is facing a challenging period. A recent report has revealed a significant downturn in exports, a stark contrast to the record-breaking year of 2024. But here's where it gets controversial: ongoing trade tensions are to blame, and the consequences are far-reaching.
Globally, U.S. spirits exports have taken a 9% hit in the second quarter of 2025 compared to the same period last year. This translates to a substantial loss of $57.4 million for American distillers. And the impact is felt most acutely in key markets like the EU, UK, Japan, and Canada, with the latter experiencing an astonishing 85% drop in imports of U.S. spirits.
The report from the Distilled Spirits Council of the U.S. paints a concerning picture. It highlights how, prior to the imposition of tariffs by the Trump administration, these four markets accounted for a significant 70% of U.S. spirits exports. Now, in the second quarter of 2025, exports to the EU have fallen by 12%, the UK and Japan have seen decreases of over 23%, and Canada's decline is the most severe at 85%.
U.S. Rep. Morgan McGarvey, in a scathing statement, blamed President Trump's tariff policies for the hardship faced by Kentucky's bourbon industry. He questioned the rationale behind a trade war that seemingly jeopardizes the livelihoods of farmers, workers, and truck drivers.
Canada, in particular, has had a dramatic impact on U.S. spirits exports. While the country recently lifted retaliatory tariffs, exports to Canada in the second quarter fell to below $10 million. This has led to a notable increase in sales of Ontario-made spirits, with the Liquor Control Board of Ontario reporting a 23% year-over-year increase in sales of local products, including a 4.5% rise in Ontario-made spirits.
Michelle Wasylyshen, president of Ontario Craft Wineries, attributed this success to the "Buy Canadian" movement, which has allowed Canadian producers to reach new consumers and gain a stronger foothold in the market.
American whiskey, including bourbon, has seen a global export decrease of 13%, resulting in a loss of $40.5 million in the second quarter. The DISCUS report warns that this trend could lead international consumers to substitute U.S. spirits with domestic or imported alternatives, posing a significant challenge to the industry.
And it's not just the export market that's suffering. American whiskey sales are stagnating domestically, while inventory levels remain at a record high of 1.5 billion proof gallons. Kentucky, a major player in the industry, exported over $750 million in spirits in 2024 alone.
The report concludes that if trade disruptions continue, U.S. distillers may face increasing pressure and financial strain. It's a worrying prospect for an industry that has long been a symbol of American culture and heritage.
What are your thoughts on this trade war's impact on the spirits industry? Do you think there are ways to mitigate these losses and support American distillers? Let's discuss in the comments!
