Bourbon is America’s native spirit, and while its roots are firmly planted in Kentucky, its reach extends far beyond state lines. The question arises: Does the bourbon industry truly rely on Canadian and European consumers to thrive?
The Importance of Canadian and European Exports
In 2023, Kentucky exported approximately $43 million worth of whiskey to Canada, making it the state’s largest export market for spirits. This accounted for about 10% of Kentucky’s total distilled spirits exports, underscoring Canada’s significance as a trading partner for American bourbon.
Similarly, the European Union (EU) has been a crucial market for American whiskey. In 2023, U.S. spirits exports to the EU increased by 8%, reaching $2.2 billion, largely due to the EU’s suspension of a 25% retaliatory tariff on American whiskey. This suspension facilitated a recovery in sales within the EU, a key market for American spirits.
The Impact of Tariffs on Bourbon Exports
Canada
Trade relations between the U.S. and Canada have experienced turbulence in recent years, particularly concerning tariffs on goods. In 2025, the U.S. imposed a 25% tariff on certain Canadian imports, including steel, aluminum, and automobiles. In retaliation, Canada implemented counter-tariffs on U.S. goods, including a 25% surtax on American spirits, effective March 4, 2025.
These tariffs had a significant impact on bourbon exports. In the first half of 2025, U.S. liquor exports to Canada plummeted by more than 60%, as Canadian provinces removed American alcohol from retail shelves in protest of U.S. trade policies. This move disrupted the bourbon supply chain and led to shortages in Canadian markets.
European Union
The EU’s retaliatory tariffs on American whiskey have also had a notable impact. In 2018, the EU imposed a 25% retaliatory tariff on American whiskeys in response to U.S. tariffs on steel and aluminum. This led to a 20% decline in whiskey exports to the EU, from $552 million in 2018 to about $440 million in 2021.
However, in June 2021, the U.S. and EU announced a five-year suspension of tariffs on U.S. and EU distilled spirits and wines as part of the WTO Boeing-Airbus trade dispute agreement. This suspension allowed American whiskey exports to the EU to rebound, reaching $705 million in 2023.
Despite this progress, the EU announced plans to reimpose a 50% tariff on American whiskey effective March 31, 2025, if no agreement is reached in the ongoing steel and aluminum dispute. This potential tariff increase has raised concerns within the bourbon industry about the stability of the European market. This instability continues today.
Could Bourbon Survive Without Canada and Europe?
Yes. The domestic market for bourbon remains robust, accounting for the overwhelming majority of sales. In 2023, Americans consumed more than 31 million 9-liter cases of American whiskey, with bourbon leading that charge. Even without Canada and Europe, U.S. consumer demand alone could sustain the industry.
However, consumers are choosing to drink less distilled spirits while choosing ready-made cocktails in a can and other lower cost alcohol for consumption, such as beer. This is mainly due to inflation pressures in the U.S. as well as, American’s are just drinking less alcohol overall.
That said, Canada and Europe provide more than just volume. They deliver:
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Consistency – Stable, nearby export partners less subject to long shipping times or costly logistics.
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Diversification – Outlets that help producers hedge against downturns in other international markets.
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Tourism Links – Canadian and European bourbon fans frequently visit Kentucky, adding millions to the state’s tourism economy.
The Bottom Line
The bourbon industry does not depend on Canada and Europe for survival, but their demand strengthens it. Exports to these regions offer safety nets, additional visibility, and reliable sales, particularly for mid-sized and craft distilleries looking to expand.
The lesson from recent tariff disputes is clear: Canada and Europe are essential to bourbon’s future, thus their roles are far too valuable to ignore. Like a well-crafted mash bill, balance matters—and these international markets help keep America’s native spirit in equilibrium on the world stage.
