A chilling trade war story is unfolding, and it's not just about numbers and tariffs. It's a tale of how a friendly neighbor, Canada, turned its back on American distilled spirits, leaving distillers with a bitter hangover.
The Cold Shoulder from the North
American distillers, known for their craft and innovation, have faced a brutal 85% drop in exports to Canada, a key market. This plunge is just one part of a broader decline in international sales, with global trade tensions taking their toll. Even though Canada has lifted its retaliatory tariffs, American spirits remain banished from Canadian shelves, a situation that distillers like Tom Bard describe as a long-lasting hangover.
The Trade War's Lingering Effects
The majority of Canadian provinces continue this ban, and distillers fear that the international thirst for American spirits might be permanently curbed due to consumer reactions to trade conflicts. Overall, American spirits exports fell 9% in the second quarter of 2025, with sharp declines in crucial markets like the EU, UK, and Japan. This comes after a record-breaking year in 2024, leaving distillers wondering if they can ever reclaim their international success.
A Shift in Consumer Preferences?
Chris Swonger, CEO of the Distilled Spirits Council, warns that international consumers might be turning to domestic or other foreign spirits, signaling a potential shift away from iconic American brands. Canada's retaliation is unique; it's the only key trading partner to hit back at American spirits in response to Trump's tariff policies. But here's where it gets controversial: American distilled spirits have been a prime target for retaliation, with Trump's tariffs on European steel and aluminum leading to a plunge in whiskey exports to the EU, costing distillers over $100 million.
The Fight for Free Trade
The Distilled Spirits Council advocates for zero-for-zero tariffs with key markets, arguing that this would provide the certainty distillers need. Global markets are crucial for American whiskey producers, especially with a supply-and-demand crunch in the U.S. market. Swonger emphasizes the importance of reliable access to international markets, especially with the U.S. market slowing down.
The Dramatic Drop-Off
The most dramatic quarterly drop occurred in Canada, where U.S. spirits exports fell below $10 million, a staggering 85% plunge. This decline was felt across all spirits categories, with American whiskey, vodka, cordials, and brandy all experiencing double-digit drops. While sales to other countries like Mexico, Australia, and Brazil surged, they couldn't make up for the losses in key markets.
The Impact on Producers
Both large and small producers are feeling the pinch from these trade conflicts. Brown-Forman Corp., a major player, reported a 3% drop in net sales, with significant declines in Germany, the UK, and Canada. But large distillers have the resources to weather these storms, a luxury that small producers like Tom Bard don't have. Bard's story is a testament to the abrupt halt in growth and expansion plans due to trade tensions and political comments.
The Road to Recovery
Reclaiming lost market share is a daunting task, and Bard knows he'll have to start from scratch. He plans to physically go back to Canada next year, spending time and effort to get his products back on the shelves. It's a long and uncertain road, but one that many distillers are facing as they navigate the complex world of international trade and politics.
So, what do you think? Is there a way back for American distilled spirits in Canada? Or has the damage been done? We'd love to hear your thoughts in the comments!
