US Whiskey Trade Groups Relieved Over Postponement Of Trade War
By Richard Thomas
In the wake of US President Donald Trump’s backing off of his threats to open a trade war with Canada and Mexico, the American Craft Spirits Association and the Kentucky Distillers Association both released statements expressing their concern over any retaliatory tariffs that would be placed on their products and their relief over the 30-day postponement of the looming trade war.
Shortly after taking office, Trump threatened US neighbors and allies Canada and Mexico with a 25% tariff on all imports. Mexico and Canada were preparing retaliatory tariffs in return when Trump backed down, announcing a postponement of 30 days. As it relates to whiskey, it was Canada that was striking back at Trump’s MAGA movement most strongly. Canada’s trade retaliation was being tailored to specifically slap Red State (i.e. states that are consistently majority Republican) exports.
Whiskey has featured in such measures since Trump’s first trade war. Europe responded to Trump’s earlier tariffs on steel and aluminum with (in part) tariffs on whiskey, since that would largely fall on Kentucky, the home state of then-Senate Republican leader Mitch McConnell. It was never officially acknowledged, but widely perceived as a strategy to pressure the senior Republican.
Contrary to the falsehoods spread by some whiskey bloggers and podcasters, Canada is a major market American exports, ranking second overall in 2023 at $255 million. Canadians were widely reported and covered in social media as preempting the proposed retaliatory tariffs by removing American whiskey products from their shelves. Coming on top of an ongoing sales slump in whiskey, losing the Canadian market would hurt all the large whiskey distillers (as they are located in Indiana, Kentucky and Tennessee). Some of the craft distilling sector may have been spared, if the targeted Canadian measures carried through as intended.
American business interests across the board have been lobbying against Trump’s proposed tariffs since before the inauguration. Once announced, his desire to start a trade war with the two largest US trading partners plus China sent the US stock market into freefall. Trump quickly backed down, since all the measures promised by Mexico and Canada to postpone the trade war were already agreed to with the preceding Biden Administration. However, Trump went forward with his 10% blanket tariff on China, and China is implementing retaliatory measures.
Insofar as the US whiskey industry is concerned, China is a relatively unimportant market. The Chinese had already imposed a 25% tariff on American whiskeys in 2018 (joining the Europeans in slapping at Mitch McConnell), during Trump’s first trade war. As a result, whiskey exports to China have remained flat ever since.
