U.S. whiskey has lost ground in Canada as new tariffs and trade restrictions reshape the market for Bourbon, Canadian whisky, Scotch and Irish whiskey.
Over a year into the United States' trade war with Canada, the spirits industry continues to suffer from collateral damage. American whiskey now has limited access to Canadian liquor-store shelves, while the U.S. has responded with new restrictions on Canadian alcohol.
The fight has now spread beyond North America. American whiskey exports have fallen, Canadian distillers face new barriers in the U.S., and President Donald Trump has removed tariffs on Scotch and says he will do the same for Irish whiskey. The result is a global whiskey market that looks very different than it did less than two years ago.
How The Spirits Trade War Started
The dispute began in early 2025, when the Trump administration imposed new tariffs on Canadian goods and Canada retaliated. Beginning in March 2025, some Canadian provinces stopped buying or selling American alcohol altogether. Ontario and Quebec were among the biggest markets lost. Alberta and Saskatchewan later reopened their markets to U.S. products, but restrictions remained across most of Canada.
For American distillers, the effect was worse than a normal tariff. Bourbon, rye, Tennessee whiskey and other U.S. spirits didn't simply become more expensive — they largely disappeared from store shelves.
The fight escalated again this summer. After negotiations between Trump and Canadian Prime Minister Mark Carney failed to produce an agreement, a new 50% U.S. tariff on select Canadian products took effect August 22. Saskatchewan Premier Scott Moe subsequently announced a 50% levy on American alcohol. On September 8, Trump went further, signing a proclamation that will bar certain Canadian alcoholic beverages from entering the United States beginning September 29.
American Whiskey Sales Take A Hit
U.S. spirits exports fell 3.8% to $2.37 billion in 2025, according to the Distilled Spirits Council of the United States (DISCUS), while American whiskey exports fell 19% to $1.08 billion.
Canada accounted for a large part of the damage. U.S. spirits exports there fell more than 70% from the beginning of the provincial restrictions in March through the end of 2025. Without Canada, American spirits exports actually increased 2.5%.
The fallout extends beyond distilleries to grain farmers, cooperages and other businesses that support American whiskey. Unfortunately, getting bottles back onto Canadian shelves is no guarantee sales will rebound. For the better part of two years, Canadian consumers have had plenty of time to buy something else.
The Whiskey Trade War's Winners And Losers
While American whiskey has lost ground in Canada, the picture elsewhere is considerably more complicated.
Canadian whisky is now encountering barriers going the other direction. Canadian spirits entering the U.S. have faced a 50% additional tariff, with further import restrictions scheduled to begin September 29. There is an important loophole, however. The new rules exempt Canadian whisky shipped in containers larger than four liters, allowing bulk whisky to continue crossing the border. That could be particularly important for Crown Royal, the largest traditional Canadian whisky brand in the U.S., which can ship whisky from Canada in bulk for bottling in the United States.
Scotch whisky has fared better. The United States removed its additional tariff on U.K.-produced whisky in July, restoring tariff-free access for Scotch and whisky produced elsewhere in the United Kingdom.
That left Irish whiskey in an unusual position. Whiskey produced in Northern Ireland received the U.K. exemption, while whiskey from the Republic of Ireland remained subject to a 10% U.S. tariff. Trump now says that will change. During a September 13 visit to Ireland, Trump said he would remove the 10% tariff after Irish Taoiseach Micheál Martin, golfer Shane Lowry and others raised the issue with him. A date for the change has not yet been announced.
India presents a different kind of opportunity for American whiskey. The country is the world's largest whiskey market by volume, but steep tariffs have historically kept Bourbon and other American whiskeys on the margins. India reduced its tariff on bottled Bourbon from 150% to 100% in February 2025. American whiskey exports to India totaled just $8.8 million in 2024, but with traditional markets such as Canada struggling, the world's largest whiskey market represents a potentially important source of future growth.
The Spirits Industry Wants To Go Back To Zero
Despite the escalating restrictions, major spirits trade groups generally aren't asking governments to put more tariffs on foreign whiskey. After Trump announced the coming restrictions on Canadian alcohol, DISCUS President and CEO Chris Swonger said American distillers understood the damage such measures could cause.
“We know firsthand the damage these measures can cause, and we do not wish to see Canadian distillers face similar hardship,” Swonger said in a statement. DISCUS has instead called for a return to the “zero-for-zero” system that allowed spirits to move between major markets without tariffs.
For American whiskey producers, the first priority is getting bourbon, rye and other U.S. spirits back onto Canadian shelves. But after more than a year of tariffs and retaliation, getting the bottles back may be easier than getting all of the customers back.
All images property of TSR.
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