Kentucky Bourbon Industry Prepares for U.S.-Canada Trade War Fallout
A growing trade conflict between the U.S. and Canada has led to the ban of American-made spirits in Ontario, putting Kentucky distilleries on alert for potential consequences.
Update: Following the publication of this article, President Donald Trump announced on social media that he would delay planned tariffs on Canada and Mexico until April 2, possibly longer.
On Tuesday, Canadian Prime Minister Justin Trudeau revealed that Ottawa would immediately impose a 25% tariff on over $20 billion worth of U.S. imports, with additional tariffs on another $86 billion of products to follow in the coming weeks. Trudeau also encouraged Canada to reduce its purchases of U.S.-made goods, particularly Florida orange juice and Kentucky bourbon.
In Ontario, Canada’s largest province, Premier Doug Ford ordered a halt to the purchasing and sale of U.S. alcohol, including bourbon.
“As part of Ontario’s response to U.S. tariffs, the government of Ontario has directed LCBO to take operational measures to restrict the sale and importation of all U.S. beverage alcohol, effective immediately,” said a statement on the Liquor Control Board of Ontario’s website.
The LCBO is the body responsible for importing all U.S. alcoholic beverages in Ontario.
According to the LCBO, this affects “annual sales of up to $965 million” and includes over 3,600 products from 35 U.S. states.
Eric Gregory, president of the Kentucky Distillers’ Association, stated in a Tuesday news release that “retaliatory measures against bourbon harm these markets and threaten long-term growth, including the unjust removal of American spirits from store shelves and restrictions on new alcohol purchases from U.S. companies.”
During a shareholder call on Wednesday, leaders at Louisville-based Brown-Forman, makers of Jack Daniels, initially did not address the tariffs and sales restrictions until a shareholder inquired.
“Canada’s not a huge market for us,” said CEO Lawson Whiting. “It’s about 1% of our sales, so we can handle it. It’s disappointing that some consumers won’t be able to get our Jack Daniels, which is very popular there. But we’ll have to see how it unfolds.”
Whiting added that the company was waiting to see Mexico’s response to the tariffs.
Royce Neeley, owner and master distiller at Neeley Family Distillery in Sparta, Kentucky, said his family has been producing spirits for decades. While he believes tariffs will affect certain parts of production, he sees a mixed impact.
“When I saw the tariffs were coming, I called our grain suppliers to understand how it would impact us. It looks like rye grain might rise, but corn and wheat could drop, which could benefit us,” Neeley said.
He doesn’t mind Canada’s retaliatory tariffs but finds Ontario’s outright ban on bourbon sales disappointing.
“It’s one thing to impose a tariff on American bourbon. I can understand that. But pulling it off the shelves altogether was pretty shocking,” he said. “What it does is hurt consumers in Canada, as they won’t be able to buy Kentucky bourbon anymore.”
Neeley noted that Canadian consumers would suffer the most, as they may be forced to opt for alternatives like Crown Royal, which he believes doesn’t compare to Kentucky bourbon.
Ontario isn’t the only province scaling back on bourbon purchases from the U.S.
Victor Yarbrough, CEO of Louisville-based Brough Brothers whiskey company, shared that a distribution deal in New Brunswick had been put on hold indefinitely.
“We were in talks and even had a meeting scheduled, but within two weeks, we were told to pause everything and remove our products from the shelves in Canada,” Yarbrough said.
While he was disappointed by the delay, he understood the reasoning behind Canada’s response.
“You can’t control how someone reacts when you’ve created the issue,” Yarbrough said. “This is just where we are now.”
He added that the company would focus on expanding into other international markets and growing its U.S. presence.
