The Tariff War Destroying American Whiskey: How Trade Disputes Cost Kentucky Bourbon $1.3 Billion in Exports

On December 21, 2025, Jim Beam announced it would pause production at its main distillery in Clermont, Kentucky—the largest bourbon manufacturer in America—for an entire year SOURCE. The plant produces about a third of the company's annual output of approximately 26.5 million gallons SOURCE.

The announcement came months after Jim Beam's parent company, Brown-Forman, laid off about 650 employees—12% of its workforce—in the face of declining demand SOURCE. Several other whiskey brands, including Garrard County Distilling Co. in Kentucky and Uncle Nearest in Tennessee, have been placed into receivership in 2025 SOURCE.

This isn't just one company's bad year. It's the visible collapse of an American export powerhouse caught in a global tariff war that has turned bourbon—Kentucky's signature product—into collateral damage in President Trump's trade disputes with China, Canada, Europe, and Turkey.

American whiskey exports totaled $1.3 billion in 2024, accounting for 54% of all U.S. spirits exports in value terms and 33% in volume SOURCE. Now, those exports face retaliatory tariffs of 160% in China, 70% in Turkey, 25% in Canada, and a threatened 50% in the European Union SOURCE.

Overall exports of American spirits fell 9% in the second quarter of 2025 compared to the same period last year SOURCE. American whiskey, despite its dominance in exports, declined 5.4% in 2024 mainly due to rising concerns about the return and doubling of EU tariffs on American whiskeys, and uncertainty at East and Gulf Coast ports due to labor negotiations and a brief strike in the fall SOURCE.

The ongoing challenges straining the liquor industry are "part of the fallout of Trump's trade war" SOURCE. This is the story of how global trade disputes turned America's signature spirit into a political weapon—and why the consequences reach far beyond distilleries to farms, truckers, barrel makers, bars, and entire Kentucky communities.

Bourbon's Strategic Role in Trade Wars

Alcoholic beverages have become an unlikely flashpoint in trade disputes between the United States and its major partners in 2025 SOURCE. From Kentucky bourbon to French wine, these products are being leveraged as strategic tools in tariff wars SOURCE.

Alcoholic beverages have emerged as a favorite target in trade disputes for several reasons rooted in economics and politics SOURCE. Politically, alcohol hits home in key constituencies SOURCE. Iconic U.S. products like bourbon whiskey, Tennessee whiskey, and Napa Valley wine are closely associated with specific states and regions—Kentucky and Tennessee for whiskey, California for wine SOURCE.

Tariffs on these goods are a direct hit to the economic interests of those areas SOURCE. Trade partners calculate that hurting those industries will spur powerful politicians and lobbyists to demand a resolution SOURCE.

The EU's focus on Kentucky bourbon was designed to get the attention of U.S. lawmakers from bourbon country SOURCE. Similarly, when China slapped tariffs on American wine, it put pressure on California's influential wine industry SOURCE.

"Bourbon was always kind of a casualty, just kind of coincidentally, because of Mitch McConnell's historic power in the Senate," said Reid Mitenbuler, author of "Bourbon Empire: The Past and Future of America's Whiskey" SOURCE.

Cultural symbolism and consumer visibility also make alcohol an attractive target SOURCE. Unlike some industrial parts or obscure chemicals, products like Jack Daniel's whiskey or Bordeaux wine are well-known to the public SOURCE.

In essence, alcohol tariffs are leverage—they create domestic pressure on the opponent's leaders SOURCE.

The Timeline: How Tariffs Escalated

The 2025 tariff war on spirits didn't emerge from nowhere. It's the latest chapter in a trade dispute that began during Trump's first presidency and reignited with devastating force in his second term.

The 30-day pause on Trump's tariffs ended on March 4, 2025, when 25% tariffs were set into motion for Canada and Mexico SOURCE. After throwing around varied rates—from 10% to 145%—China's tariffs were set at 20% SOURCE.

Anger spread throughout all three nations SOURCE. Mexico's President Claudia Sheinbaum promised retaliatory tariffs, as did Canada's Prime Minister Justin Trudeau SOURCE.

Canada began imposing a 25% tariff on all U.S. spirits on March 13, 2025 SOURCE. Most Canadian provinces removed all U.S. alcohol products from retail stores SOURCE.

Media reports circulated videos of Canadians pulling Kentucky bourbon off liquor store shelves SOURCE. Tags reading "Buy Canadian Instead" appeared on empty shelves where American whiskey used to be displayed at a supermarket in Vancouver, Canada on March 28, 2025 SOURCE.

"That's worse than a tariff because it's literally taking your sales away," Brown-Forman CEO Lawson Whiting said in an earnings call, referring to Canada pulling American-made spirits off store shelves SOURCE. However, he noted that Canada accounts for just 1% of the company's total sales, so the company can "withstand" the losses SOURCE.

That proved overly optimistic. The European Union retaliated on March 12, 2025, announcing new duties on U.S. farm and industrial products, including bourbon and wine SOURCE.

President Trump responded in force on March 13, threatening a 200% tariff on European Champagne, wine, and spirits SOURCE. In response, the EU moved to hit American whiskey with a 50% tariff SOURCE.

Trump's 25% tariff on all steel and aluminum imports started Wednesday, March 12 SOURCE. The EU responded to what it described as "unjustified" tariffs by announcing countermeasures on up to $28 billion of American goods, including boats, bourbon and motorbikes SOURCE.

The European Commission announced plans to impose a 50% tariff on American whiskey starting on April 1st SOURCE. Between 2018 and 2022, a similar trade dispute saw the EU enact a retaliatory 25% tariff on imports of American spirits until a two-year suspension on the tariffs, which was later extended from December 2023 until March 31, 2025 SOURCE.

The April Reprieve and Ongoing Threats

Facing catastrophic damage to the spirits industry, negotiations intensified through late March and early April 2025.

On April 9, 2025, EU member states voted on its retaliatory tariff list against the U.S., and American whiskey and other American spirits were not included on its final list SOURCE. The EU's decision not to reimpose a retaliatory tariff on American whiskeys and other U.S. spirits was a positive first step toward untangling the trade dispute SOURCE.

Intense negotiations and industry lobbying led to a last-minute reprieve: in early April 2025, EU member states excluded American whiskey from the final retaliatory tariff list, opting not to reimpose any tariff on bourbon for now SOURCE. This decision effectively extended the duty-free treatment of U.S. whiskey, averting a potential trade crisis SOURCE.

However, the relief proved temporary and incomplete. Over the weekend, President Trump sent letters to the EU and Mexico, setting a 30% tariff for both and referring to their respective trade deficits with the U.S. as a "major threat" to national security SOURCE. The 30% rate with each country is expected to take effect at the renewed negotiation deadline of August 1, 2025 SOURCE.

President Trump announced a 35% blanket tariff on Canadian goods effective August 1st, marking an increase from the 25% rate imposed in February and exceeding market expectations SOURCE. Canada serves as both a major source of premium spirits like Canadian whisky and a key export destination for U.S. spirits SOURCE.

The Damage Beyond Europe: China, Turkey, and India

While EU tariffs grabbed headlines, American spirits faced devastating retaliatory measures across multiple markets.

U.S. spirits are being hit with a 160% retaliatory tariff in China and a 70% retaliatory tariff by Turkey SOURCE. These extraordinary rates essentially price American whiskey out of these markets entirely.

The China situation is particularly devastating. The U.S. imposed additional 10% tariffs on Chinese imports, including alcoholic beverages, as of February 4, 2025, then increased the tariffs to 20% on March 4 SOURCE. Products of China and Hong Kong are also subject to so-called reciprocal tariffs (125% April 10 through May 13; 10% as of May 14, for an initial period of 90 days) SOURCE.

China responded with the 160% retaliatory tariff that effectively eliminates American whiskey from the Chinese market SOURCE.

In contrast to these punitive measures, on February 14, 2025, India announced a reduction of its import tariff on bourbon from 150% to 100%, effective immediately SOURCE. American bourbon producers received a boost as India slashed import tariffs from 150% to 100% following a White House meeting between President Trump and India's Prime Minister Narendra Modi SOURCE.

The move gave manufacturers like Jack Daniels and Jim Beam a price advantage over Scotch whisky competitors in the Indian market SOURCE. However, even at 100%, India's tariff remains prohibitively high, and the small market opening does little to offset massive losses elsewhere.

Canada: The Boycott That Went Beyond Tariffs

The Canadian response to U.S. tariffs proved particularly devastating because it went beyond simple price increases.

Most Canadian provinces removed all U.S. alcohol products from retail stores in response to Trump's tariffs SOURCE. The Liquor Control Board of Ontario (LCBO) announced the removal of U.S. beverage alcohol on its website following President Trump's introduction of the blanket 25% tariff on Canadian imports into the U.S. SOURCE.

Canadian citizens, business, and local governments also boycotted American products SOURCE. Media reports circulated videos of Canadians pulling Kentucky bourbon off liquor store shelves SOURCE.

Canada is the second largest market for U.S. spirits exports SOURCE. Canada is the biggest importer of U.S. wine and the second largest market for U.S. spirits exports SOURCE.

The combination of 25% tariffs plus retail boycotts meant that American whiskey exports to Canada essentially ceased overnight. Unlike tariffs that raise prices but allow some sales to continue, complete removal from store shelves eliminates the market entirely.

The Economics: Export Collapse and Market Share Loss

The numbers tell a devastating story of American spirits exports in free fall.

Overall exports of American spirits fell 9% in the second quarter of 2025 compared to the same period last year SOURCE. American whiskeys, despite a 5.4% decline in 2024, stayed by far the most exported category of U.S. spirits SOURCE.

American whiskeys accounted for 54% of all spirits exports in value terms at more than $1.3 billion and 33% in volume terms SOURCE. American whiskeys include Tennessee whiskey, bourbon, American rye whiskey, and American single malt SOURCE.

The 5.4% decline in 2024 was driven mainly by rising concerns about the return and doubling of the EU tariffs on American whiskeys, and uncertainty at East and Gulf Coast ports due to labor negotiations and a brief strike in the fall SOURCE.

Historical data demonstrates the devastating impact of tariffs. In 2021, following tariffs temporarily implemented during President Trump's first term, U.S. whiskey sales to the EU dropped 20% SOURCE.

The EU is the largest market for exports of U.S. whiskey SOURCE. Nearly 86% of U.S. spirits exports ($2.1 billion) and 86% of American whiskey exports ($1.14 billion) go to countries that eliminated tariffs on U.S. spirits SOURCE.

In exchange, the U.S. opened its market for imported spirits by eliminating tariffs SOURCE. As a result, approximately 98% of spirits imported into the U.S. originate from countries that have eliminated tariffs on U.S. spirits exports SOURCE.

The zero-for-zero tariff framework that has governed global spirits trade for decades is collapsing, and American whiskey is paying the price.

Impact on Production and Employment

The tariff war's damage extends far beyond export statistics to actual production facilities and American jobs.

Jim Beam's decision to pause distillation at its main distillery on the James B. Beam campus for 2026 marks a significant step for the country's largest bourbon manufacturer SOURCE. The brand will "pause distillation at our main distillery on the James B. Beam campus for 2026 while we take the opportunity to invest in site enhancements," the company said in a statement SOURCE.

However, the statement put out by Jim Beam did not even mention tariffs SOURCE. Instead, the company framed the shutdown as an investment opportunity—a carefully worded euphemism for demand collapse.

Brown-Forman previously laid off about 650 employees, or 12% of its workforce, in the face of declining demand SOURCE. Shares of spirits companies fell in midday trading following tariff announcements, with Brown-Forman dropping nearly 7%, Remy Cointreau falling about 4%, and Diageo slipping nearly 2% SOURCE.

Several other whiskey brands, including Garrard County Distilling Co. in Kentucky and Uncle Nearest in Tennessee, have been placed into receivership in 2025 SOURCE.

"Unfortunately, the return of retaliatory tariffs on American whiskey will have far-reaching consequences across Kentucky, home to 95% of the world's bourbon," said Eric Gregory, president of the Kentucky Distillers' Association SOURCE. "That means hard-working Americans—corn farmers, truckers, distillery workers, barrel makers, bartenders, servers, and the communities and businesses built around Kentucky bourbon will suffer" SOURCE.

Kentucky has more than 14 million barrels of bourbon aging in warehouses across the state SOURCE. In fact, Kentucky has an all-time high of 16.1 million aging barrels of bourbon in its warehouses, said the Kentucky Distillers' Association SOURCE.

Because these barrels are taxed by the state, Kentucky distillers paid a $75 million tab in aging barrel taxes in 2025, a 27% increase from 2024 and an astronomical 163% increase over the last five years alone SOURCE.

Much of the available product can't even be sold right now—most of the 16.1 million barrels of bourbon currently being aged won't be ready to bottle until after 2030 SOURCE.

The Oversupply Problem: Tariffs Meet Changing Demand

Tariffs didn't create the whiskey industry's problems in isolation—they collided catastrophically with an existing oversupply crisis driven by generational drinking trends.

Overall demand for whiskey and bourbon has decreased, which has now caused an oversupply of whiskey SOURCE. Sales have slumped as consumers rein in spending and drinking during downward economic times SOURCE.

It would be hard to isolate the effects of tariffs on bourbon since there are other factors that can influence the price, explained Reid Mitenbuler SOURCE. Millennials and Gen Xers had 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, Mitenbuler said SOURCE.

"So there are already huge surpluses in the industry," Mitenbuler said SOURCE. A lot of whiskey companies had been looking to expand their reach in overseas markets as demand has tapered off in the U.S., Mitenbuler said, adding that the trade war could drive some producers out of business entirely SOURCE.

"There's something kind of ironic about this really iconic American product being hurt by policies that purport to be bringing America back or saving America," Mitenbuler said SOURCE.

The combination is lethal: declining domestic demand drove distillers to prioritize export markets just as those markets slammed shut with retaliatory tariffs. With 16.1 million barrels aging in Kentucky warehouses that won't be ready until after 2030, and no export markets to absorb them, the industry faces a perfect storm of oversupply.

Distribution and Retail Chaos

The tariff uncertainty created havoc throughout the distribution chain, affecting importers, distributors, and retailers.

Importers of French wine in New York had to consider the risk that a container of Bordeaux might land in the U.S. and suddenly incur a 100% or 200% duty, wiping out any profit SOURCE. This uncertainty caused some importers to hold off on orders or diversify their sourcing to non-EU countries SOURCE.

Domestic distributors who export American spirits to Canada or Europe likewise struggled; their overseas partners either cut orders or demanded deep discounts to offset the tariff cost SOURCE. In some cases, distribution agreements were suspended until trade conditions improved SOURCE.

Retailers felt the effects when certain products became scarce or expensive: European cheeses and wines subject to tariffs saw price hikes in U.S. stores, and European shop owners reported higher prices for American bourbon SOURCE.

The U.S. Wine Trade Alliance urged American companies to pause shipments of European wine, spirits, and beer, or face potential 200% tariffs SOURCE. "This would be a death knell for our company and our industry," said Harmon Skurnik, president of Skurnik Wine & Spirits SOURCE.

Consumer Impact: Higher Prices, Fewer Choices

For consumers, the tariff battles have meant higher prices and reduced choices, albeit unevenly SOURCE. European spirits lovers have seen the price of American whiskeys climb due to the EU's tariff SOURCE.

In Canada, the complete removal of American spirits from provincial liquor stores meant consumers literally could not purchase their preferred bourbon brands regardless of price. The market didn't become more expensive—it disappeared entirely.

Winemakers, importers, restaurant owners, and spirits producers are devastated SOURCE. Though far less than what was originally threatened, even 15% is catastrophic news for the bottom line SOURCE.

The Legal Challenge and Uncertainty

Adding another layer of complexity, the legality of Trump's tariff orders faced judicial scrutiny.

On May 28, 2025, a U.S. trade court ruling vacated President Trump's global tariff orders, meaning the newly announced 10% duty on Scotch whisky and other imports would not take effect SOURCE. U.S. importers—who had been scrambling to account for the proposed levy—now know Scotch will enter the country duty-free SOURCE.

The U.S. Court of International Trade (Case No. 25-66) blocked the tariff orders, saying Trump's orders "exceed any authority" to levy such tariffs SOURCE.

In early September 2025, the U.S. Court of Appeals ruled that most of the Trump administration's tariffs are "invalid as contrary to law"—i.e. illegal SOURCE. They are left in place, as the case moves toward the Supreme Court for further deliberations SOURCE.

The Trump administration announced plans to appeal, keeping legal uncertainty technically open but not affecting current practice SOURCE.

This legal chaos created additional uncertainty for businesses trying to plan shipments, set prices, and manage inventory. Even when tariffs were blocked, the threat of appeal and reinstatement discouraged long-term contracts and investment.

The Industry's Response and Lobbying

The spirits industry mounted an aggressive lobbying campaign to prevent catastrophic tariffs.

The EU's decision not to reimpose a retaliatory tariff on American whiskeys and other U.S. spirits is a positive first step toward untangling the trade dispute SOURCE. Continued long-term growth for the industry will be dependent on ensuring a permanent return to zero-for-zero spirits tariffs with the 51 countries and securing new market opening agreements SOURCE.

"We urge the US and EU governments to come to a resolution that gets our spirits industry back to zero-for-zero tariffs," said Chris Swonger, CEO of the Distilled Spirits Council of the United States SOURCE.

The EU's decision to spike tariffs on American whiskey to 50% is "deeply disappointing and will severely undercut the successful efforts to rebuild US spirits exports in EU countries," Swonger said in a statement SOURCE.

Intense negotiations and industry lobbying led to a last-minute reprieve in early April 2025, with EU member states excluding American whiskey from the final retaliatory tariff list SOURCE.

The Zero-for-Zero Framework Under Threat

The global spirits industry has operated for decades under a "zero-for-zero" tariff framework that the current trade war threatens to destroy permanently.

Nearly 86% of U.S. spirits exports ($2.1 billion) and 86% of American whiskey exports ($1.14 billion) go to countries that eliminated tariffs on U.S. spirits SOURCE. In exchange, the U.S. opened its market for imported spirits by eliminating tariffs SOURCE.

As a result, approximately 98% of spirits imported into the U.S. originate from countries that have eliminated tariffs on U.S. spirits exports SOURCE.

In contrast, U.S. spirits exports to high-tariff countries—such as India (100% tariff on bottled bourbon, 150% tariff on all other spirits), Vietnam (45% tariff), Brazil (20% tariff on all imported distilled spirits, except bulk whiskey, which has a 12% tariff), and South Africa (tariffs on imported spirits range from 1.54 Rand/liter for bottled spirits to 1.36 Rand/liter for spirits imported in bulk)—reached $86.7 million, accounting for only 3% of total spirits exports SOURCE.

The data make the case that stable, tariff-free trade directly correlates with robust growth in transatlantic whiskey commerce SOURCE. The dismantling of this framework threatens the entire global spirits trade architecture.

Political Fallout in Kentucky

The tariff war hit Kentucky particularly hard politically, given bourbon's central role in the state's economy and identity.

It is "hard to overstate just how devastating Trump's tariffs are for America's signature spirit," said Rep. Morgan McGarvey (D-Ky.) in a post on X, referring to the Jim Beam closure SOURCE. "Thousands of Kentuckians power the bourbon industry—we will all feel the impact of this" SOURCE.

"Unfortunately, the return of retaliatory tariffs on American whiskey will have far-reaching consequences across Kentucky, home to 95% of the world's bourbon," said Eric Gregory, president of the Kentucky Distillers' Association SOURCE. "That means hard-working Americans—corn farmers, truckers, distillery workers, barrel makers, bartenders, servers, and the communities and businesses built around Kentucky bourbon will suffer" SOURCE.

The irony is profound: bourbon became a tariff target precisely because of its association with Kentucky and the political power of Kentucky's senators. The strategy worked—it created devastating economic pressure on a key Republican state—but the political calculus offers little comfort to unemployed distillery workers.

What Other Spirits Categories Show

While American whiskey bore the brunt of tariff damage, other spirits categories provide context.

Compared to 2023, U.S. exports of rum declined by 12% to $86 million, gin increased by 32% to $53 million, and brandy declined by 39% to $23 million SOURCE.

Exports of cordials and vodka reached new records in 2024, with cordials rising by 128% to $367 million and vodka increasing by 82% to $292 million compared to 2023 SOURCE.

These categories benefited from different tariff treatment and market dynamics. Cordials and vodka weren't targeted with the same retaliatory fervor as whiskey, allowing them to grow even as bourbon collapsed.

The Import Side: What America Bought

The tariff war affected not just exports but imports, with implications for American consumers.

The United States imported $1.62 billion of Canadian beverages, spirits, and vinegar in 2024 SOURCE. The U.S. imported even more Mexican beer, wine, spirits, and vinegar in 2024—$13.14 billion worth SOURCE.

Though most beer consumed in the U.S. is produced domestically, about 81% of U.S. beer imports came from Mexico in 2023 SOURCE. Tequila imports jumped from $350 million to $5.4 billion between 2000 and 2024 SOURCE.

The U.S. imposed 25% tariffs on many Canadian and Mexican imports on March 4, but products that qualify for preferential treatment under the United States-Mexico-Canada Agreement (USMCA), which includes most wine, beer, and spirits, are not subject to the additional tariffs effective March 7 SOURCE.

So while the cans containing beer and other beverages are subject to tariffs, the contents of the can may not be SOURCE. This created bizarre situations where aluminum cans faced 25% tariffs but the beer inside remained duty-free under USMCA.

New U.S. tariffs on steel and aluminum were implemented on March 12 SOURCE. Per Federal Register guidance, the additional duties on aluminum derivatives apply to beer and empty aluminum cans entered for consumption, or withdrawn from warehouse for consumption, on or after 12:01 a.m. ET on April 4, 2025 SOURCE.

The Path Forward: Negotiations and Hope

As of late 2025, the trade flows remain under pressure but negotiations continue SOURCE. Bourbon imports into the EU remain buoyant under the continued suspension, with key importers such as the Netherlands, Germany, and France maintaining high-volume orders SOURCE.

The tariff détente of 2022-2025 has clearly benefited both sides of the Atlantic in terms of jobs, sales, and consumer choice in the spirits sector SOURCE. However, all eyes are on the upcoming negotiations to prevent a relapse SOURCE.

The 2022 suspension agreement is set to expire, and without a new deal, tariffs could snap back (or even escalate) in the year ahead SOURCE. However, the recent high-level talks have been promising SOURCE.

The U.S. and EU discussed capping or eliminating tariffs on various goods in mid-2025, with both sides optimistic about carving out an exemption for wine and spirits in a final deal SOURCE. In the interim, the EU's decision earlier this year to hold off on whiskey tariffs has created a de facto extension of the favorable terms SOURCE.

As negotiations continue into 2025, the hope is that bourbon traded in bulk from Kentucky to Europe can continue to flow smoothly, fueling business growth and bourbon enthusiasm on both sides of the ocean without the return of damaging duties SOURCE.

Conclusion: An American Icon Under Siege

Kentucky bourbon—one of America's most iconic products, legally required to be made in the United States—has become collateral damage in a global trade war that threatens to permanently restructure the spirits industry.

With American whiskey exports totaling $1.3 billion and accounting for 54% of all U.S. spirits exports, the stakes are enormous SOURCE. Overall spirits exports fell 9% in Q2 2025, Jim Beam halted production for a year, 650 workers lost jobs, and 16.1 million barrels of bourbon sit aging in Kentucky warehouses with uncertain futures SOURCE.

The combination of retaliatory tariffs (160% in China, 70% in Turkey, 25% in Canada, 50% threatened in EU) with declining domestic demand from Gen Z creates a perfect storm SOURCE.

"There's something kind of ironic about this really iconic American product being hurt by policies that purport to be bringing America back or saving America," said Reid Mitenbuler, author of "Bourbon Empire" SOURCE.

The zero-for-zero tariff framework that governed global spirits trade for decades is collapsing. Nearly 86% of U.S. spirits exports go to countries that eliminated tariffs, but that architecture is crumbling under retaliatory trade measures SOURCE.

Whether Kentucky bourbon can survive this trade war depends on negotiations that pit American manufacturing interests against geopolitical posturing. For corn farmers, truckers, distillery workers, barrel makers, bartenders, and the communities built around bourbon, the outcome will determine not just business success but economic survival.

The tariff war turned America's signature spirit into a weapon. The question now is whether anything will be left to salvage when the fighting stops.