A trade dispute between the United States and Canada has dealt a major blow to one of America’s most iconic industries.
Just one year after Canadian provinces removed American whiskey from store shelves during a tariff fight linked to President Donald Trump’s trade policies, U.S. spirits exports to Canada have collapsed by nearly 70 percent.
For American distillers—especially the bourbon producers of Kentucky—the sudden drop represents a major economic hit and a reminder of how quickly international trade tensions can affect U.S. industries.
American Whiskey Exports to Canada Plummet
Canada was once one of the largest buyers of American spirits, making it a crucial overseas market for U.S. distillers.
But new data from the Distilled Spirits Council of the United States (DISCUS) shows the situation has changed dramatically.
In 2025, exports of American spirits to Canada dropped to about $89 million, down sharply from the roughly $250 million per year the market previously generated.
That massive decline pushed Canada from the second-largest export destination for American spirits to sixth place in just one year.
The drop happened quickly. Between March and December alone, exports fell from $203 million in 2024 to only $60 million in 2025—a loss of roughly $143 million.
Canadian Provinces Still Blocking American Alcohol
Even though some tariffs connected to the dispute have been lifted, the damage has not been fully reversed.
Many Canadian provinces continue to keep American whiskey and other U.S. spirits out of government-run liquor stores, which dominate alcohol sales in much of Canada.
Industry leaders say those retail bans have been the biggest factor behind the sharp decline in exports.
“Our industry thrives in a zero-for-zero tariff environment,” said Chris Swonger, president and CEO of the Distilled Spirits Council.
Swonger acknowledged that the Trump administration has been using tariffs as a tool to push for fairer trade deals and reduce global trade imbalances. However, he said the current restrictions in Canada are continuing to hurt American distillers.
“Since Liberation Day, it’s unfortunate to report that our industry has lost over 70 percent of our exports to Canada because many provinces have decided not to carry American spirits,” Swonger explained.
Kentucky’s Bourbon Industry Feels the Impact
The trade conflict has been particularly painful for Kentucky, which sits at the center of the global bourbon industry.
According to the Kentucky Distillers’ Association, the state produces 95 percent of the world’s bourbon supply. The industry supports more than 23,000 jobs and generates approximately $9 billion in economic activity each year.
For producers, the effects of the trade dispute go far beyond just export numbers.
Owen Martin, master distiller at Angel’s Envy, explained that trade tensions can ripple through every stage of the production process.
“There are tariffs on finished goods and on us shipping abroad, but I’m even thinking a step below that,” Martin said.
Trade Disputes Affect the Entire Supply Chain
One example is the barrels used to age bourbon.
Under U.S. law, bourbon must be aged in new American oak barrels, which can only be used once for bourbon production. However, finishing barrels—such as port casks used by some distillers—can be reused multiple times.
That means producers must constantly adjust their supply chain decisions based on export markets, tariffs, and international demand.
“These are the kinds of things distillers have to think about every year,” Martin explained. “You always have different opportunities and different challenges.”
Two Whiskey-Loving Nations Caught in the Middle
The situation has created a strange irony between two neighboring countries with a long shared appreciation for whiskey.
American consumers have long enjoyed Canadian whisky, while Canadians have traditionally been strong buyers of Kentucky bourbon.
Industry leaders hope the dispute will eventually be resolved so both markets can return to normal.
“American consumers love Canadian whisky, and Canadians love Kentucky bourbon,” Swonger said. “We’re hoping this gets resolved.”
The Bottom Line
For now, however, the trade dispute continues to weigh heavily on one of America’s most recognizable industries.
Until Canadian provinces restore American spirits to store shelves, U.S. distillers may continue to feel the economic sting of a trade battle that shows just how closely global politics and American business are connected.
