Trump’s trade war cripples Kentucky bourbon. American whiskey exports down $250M

Ahead of the one-year anniversary of President Trump’s April 2 “Liberation Day” announcement of new global tariffs, Kentucky’s bourbon industry is reeling.

According to a new report, exports of American whiskey fell by 19% in 2025, down $250 million. Overall, spirits exports were down 3.8%, according to the Distilled Spirits Council of the U.S.

This is the first time full-year export numbers have been released. DISCUS previously reported that domestic sales of U.S. spirits were down 2.2%, doubling the decline from the previous year.

With Kentucky distilleries sitting on record levels of inventory, many looked to overseas buyers, but that market was choked off by uncertainty over tariffs, according to the report.

“Exports remain a critical path forward, especially amid a slowdown in domestic sales and high inventory levels,” Chris Swonger, president and CEO of the DISCUS, said Tuesday. “Stable, tariff-free trade and expanding market access abroad are essential to ensuring continued growth for the U.S. spirits sector.”

Kentucky remained the top exporting state in the U.S., with more than $799 million in exports in 2025, followed by Tennessee with $793 million. Much of Tennessee’s exports are Jack Daniel’s Tennessee Whiskey, the top-selling American whiskey brand in the world, which is owned by Louisville-based Brown-Forman.

The decline in exports was caused by ongoing trade friction, retaliatory actions and broader economic headwinds, DISCUS said in a news release.

Two big impacts were the removal of American-made spirits from shelves in Canada beginning in March 2025, after Trump threatened to “annex” Canada, and the front-loading of spirits into the European Union ahead of potential retaliatory tariffs.

Exports to Canada of U.S. spirits fell by more than 70% year-over-year after the ban, March through December, down $143 million, according to the figures.

Much of the impact hit American whiskey.

For the full year, American whiskey sales to Canada were down 57% to $33 million.

Exports to the EU were down 35% in 2025, after some producers accelerated exports in the second half of 2024 to get ahead of potential retaliatory of EU tariffs. A 30% proposed tariff remains in suspension through August 2026, creating ongoing uncertainty for American distillers.

Exports of American whiskey to Japan also fell 28%, to $57 million, according to the Distilled Spirits Council’s report.

Outside those key markets, exports actually rose, the Distilled Spirits Council said, an indication that restoring zero-for-zero tariffs on spirits would benefit American companies.

The top five markets for U.S. spirits in 2025 were the EU, with $1.2 billion in exports; United Kingdom, with $153 million in exports; Australia, with $138 million in exports; Mexico, with $127 million in exports; and Canada with $89 million in exports. These markets account for 72% of all U.S. spirits exports.

There is some light at the end of the tunnel: In June 2025, Alberta and Saskatchewan reopened markets to U.S. spirits, but the other provinces of Canada have maintained their retail bans.

And spirits exports overall were up in the fourth quarter, as foreign stockpiles diminished. The EU is now the largest importer of American spirits, which currently enter duty-free.

Exports to other markets around the world, including the UK, Brazil, Colombia, Singapore, the United Arab Emirates and Australia were up significantly in 2025, partially offsetting losses elsewhere.

“With domestic demand slowing, exports to international markets represent a critical path to reducing excess inventory and ensuring the sustainability of American Whiskey makers. If trade related uncertainty and disruptions continue to erode export volumes, U.S. distillers could face mounting pressure and financial strain,” the distillers’ report said.

That pressure has shown up in layoffs and slowed production as well as potential consolidation in the industry, including a possible merger of Brown-Forman and French competitor Pernod Ricard.

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