In his second term, President Donald Trump has reintroduced and expanded tariffs, significantly affecting the global whiskey industry. These protectionist measures have led to economic strain, diplomatic tensions, and market instability, impacting both domestic producers and international trade partners.
Tariffs and retaliation: a renewed trade war
In early 2025, the Trump administration imposed sweeping tariffs, including a 25% levy on steel and aluminum imports and a 10% baseline tariff on most other imports. These actions prompted retaliatory measures from key trade partners.
European Union (EU): The EU initially planned a 50% tariff on American whiskey in response to U.S. metal tariffs. However, after President Trump threatened a 200% tariff on European alcoholic beverages, the EU exempted American whiskey from its retaliatory list to avoid escalating the trade conflict.
Canada: In contrast, Canada imposed 25% tariffs on American liquor and other goods. Several provinces, including Ontario and Quebec, removed U.S. whiskey from store shelves, directly limiting market access for American distillers.
Domestic challenges for American distillers
While the exemption from EU tariffs provided some relief, American whiskey producers continue to face significant hurdles.
Export market uncertainty: Unpredictable tariff environments have complicated long-term business planning, especially for small and emerging distillers like Brough Brothers Distillery in Kentucky. Their efforts to expand internationally have been obstructed by the ongoing trade instability.
Supply chain disruptions: Tariffs have driven up the cost of imported materials essential to whiskey production, including barrels and specialized equipment. These increased input costs have eroded margins and challenged producers’ profitability.
Global implications for the whiskey industry
The ripple effects of U.S. tariffs have extended beyond the United States, affecting the broader global whiskey market.
Scotch and Irish whiskeys: American tariffs on European imports have increased prices on Scotch and Irish whiskeys sold in the U.S. Smaller distilleries, unable to absorb these costs, now face diminished competitiveness and shrinking market share.
Canadian whiskey: U.S. tariffs have also affected Canadian whiskey producers, who depend on exports to the American market. Increased costs are passed on to consumers, resulting in lower demand and reduced revenue.
Economic and political repercussions
The broader economic and political landscape has been shaped by the administration’s trade policy.
Economic impact: Analysts project that the tariffs could reduce U.S. GDP by as much as 1% in 2025 and lower after-tax income by an average of 1.3%, amounting to approximately $1,300 per household.
Political response: Leaders from both the whiskey industry and political circles, including Senate Republicans, have voiced concern over the economic damage these tariffs cause. Calls for diplomatic engagement and policy reversals have intensified in recent months.
President Trump’s second-term tariff strategy has renewed global trade friction, with the whiskey industry caught in the middle. While some relief has come through diplomatic efforts, the uncertain policy landscape continues to challenge producers and trade partners alike. Long-term stability will depend on the resolution of ongoing disputes and the adoption of more predictable trade frameworks.
