The iconic Kentucky bourbon industry, a major contributor to the state’s economy, is now facing significant losses due to escalating trade tensions between the United States and Canada.
In response to tariffs imposed by the Trump administration, Canadian liquor stores have been instructed to remove American-made alcohol from their shelves, leading to immediate financial repercussions for bourbon distilleries.
Distilleries suffer canceled orders and financial losses
Kentucky distilleries, which produce approximately 95% of the world’s bourbon, are already feeling the pinch of the trade war.
The family-owned Michter’s Distillery in Louisville has reported $115,000 in canceled bourbon shipment orders to Canada, its largest foreign market.
Similarly, Black-owned Brough Brothers Distillery was negotiating its first shipment to Canada when talks were abruptly halted due to the tariff war.
“Literally, we’re in the middle of expansion. Everything’s been suspended, they don’t have the ability to purchase,” CEO Victor Yarbrough told NBC News.
He had initially planned to expand sales to France and the United Kingdom by 2025 but is now considering South Africa and Brazil as alternative markets.
Fawn Weaver, founder of the Black-owned Tennessee whiskey brand Uncle Nearest, also had her products pulled from Canadian shelves.
She stated that while she had anticipated a trade conflict, the reality of its effects has made global expansion significantly more difficult.
“As an independent brand, I can’t afford those tariffs. I can’t afford to absorb it, and I can’t pass it on to the consumers,” Weaver told NBC News.
“That’s the reality of it,” Andrea Wilson, chief operating officer of Michter’s, told NBC News. “We would prefer to see fewer tariffs than more.”
The impact on bourbon production technology
The bourbon-making process has evolved in recent years by integrating new technology, including IoT sensors for data collection, RFID tags on barrels for tracking, and experimental aging warehouses.
These advancements help ensure the proper conversion of sugars to alcohol and maintain quality control over long aging periods.
However, the tariff dispute threatens these technological advancements by slowing international trade, reducing export revenue, and limiting the ability of distilleries to invest in cutting-edge equipment.
Distilleries have long prided themselves on the traditional bourbon aging process, which can take over 20 years to perfect.
Master distillers stress that while new technology makes the process smarter and more efficient, it does not accelerate aging.
With potential financial strain from lost export sales, distilleries may find it more difficult to continue investing in these innovations.
Uncertain future for the bourbon industry
The ongoing trade conflict has left Kentucky distilleries uncertain about their future in international markets.
Bourbon businesses rely heavily on exports, with Canada being a key trading partner. Industry experts suggest that if tariffs continue, distilleries may need to shift their focus to less restricted markets or cut back on production investments.
Wilson said, “If we’re not selling to our largest export market, that’s a significant impact to our business, and it’s very sad for us, because we have friends, we’ve built relationships in that country for a long time.”
While the full effects of the trade war remain uncertain, one thing is clear—Kentucky’s bourbon whiskey industry is now caught in the crossfire of a political and economic dispute, with significant consequences for distilleries and consumers alike.
