How U.S. Distillers Are Weathering the Tariff Turmoil
Late last March, I attended the Distilled Spirits Council’s (DISCUS) annual conference in Washington, D.C. The timing was perversely serendipitous: On March 4, the Trump administration used the International Emergency Economic Powers Act (IEEPA) to enact 25 percent tariffs on Mexican and Canadian imports, including distilled spirits. Ramifications were already occurring, from massive order cancellations to American labels being pulled from Canadian shelves. One week after the imposition, Trump threatened a retaliatory 200 percent tariff on EU alcohol imports in response to the EU’s proposed 50 percent tariff on American whiskey. Concerns over the tariffs’ fallout dominated the conversations during the conference’s three days, whether on the convention center floor among industry professionals or on Capitol Hill in front of congressional lobbyists.
Enough time has passed from these tense days to see just how much their concerns manifested into a more tangible quagmire. The results are ugly, but not in a way that raw numbers can fully quantify.
Hard Data, Hard Times
The collective doom and gloom expressed by the conference’s attendees were justified. According to DISCUS’ American Distilled Spirits Exports 2025 Mid-Year Report, Canadian sales of U.S. spirits dropped by 68 percent in April. In Q2, exports to Canada dropped a whopping 85 percent. Several provinces including Ontario and Quebec still have bans on American spirits sales in place. The tariffs’ impacts also rippled beyond North America. The report notes exports to the U.K. and Japan both plunged by more than 23 percent in Q2, and EU exports dipped 12 percent during that time. These reductions partially stemmed from several months of threatened and delayed tariffs from the Trump administration, which eventually slapped a 15 percent tariff on Japan and the EU in August.
It’s fair to say tariffs aren’t solely responsible for these drops. Factors like reduced consumption and inflation also have a hand. Yet those factors evolve at a pace that may allow distilleries more time to strategize. The tariffs’ abrupt nature of sudden price hikes act like a sucker punch. This has sent an abnormal shock to the system for an industry that enjoyed decades of equitable trading under agreements between the United States and other nations, such as the North American Fair Trade Agreement (NAFTA).
“The tariffs have a deeper and more lasting impact due to their depth and scope of the amount,” explains Robert Cullins, chief executive officer for Disaronno International USA. “Plus, they come with no regard to normal economic conditions and previous zero-to-zero policies between the U.S. and EU relating to wine and spirits.”
Some distillers also point out that the 2025 tariffs aren’t the start of a new issue. Rather, it’s a fixed point in an ongoing struggle that began during Trump’s first administration, when the EU placed tariffs on whiskey to retaliate for the tariffs Trump placed on European aluminum and steel.
“It’s important to bring up those tariffs because people don’t remember them,” says Becky Harris, co-founder and master distiller of Catoctin Creek in Purcellville, Va. “But these newer tariffs are just the latest part of a ‘rope-a-dope’ the distilling industry’s been dealing with for nearly a decade.”
Big Issues for Small Distilleries
The tariffs’ impositions on importing and exporting distilled spirits directly impacted industry heavyweights with robust shelf presence in foreign countries, which makes sense. After all, a brand without a shelf presence can’t sell. This has also given rise to unexpected issues that can cause short-term havoc for larger brands, such as being stuck with a surplus of immovable juice.
But there have also been significant impacts for craft brands too small for the import/export game. These typically occur at the supply chain level, affecting raw materials essential for distillery production. Glass provides perhaps the most quantifiable example. Bigger brands looking to circumvent the increased costs of imported glass may turn to domestic producers. While this leans into “buy American” rhetoric sometimes used to justify the tariffs, a heavyweight contracting with a U.S. glass manufacturer may inadvertently set off a chain reaction that ultimately hurts craft brands.
“We had been buying domestic glass, but the supplier we were using broke up with us because they said we were too small. They gave us little to no notice,” Harris says. “We’re still scrambling for glass.”
These situations can create serious dilemmas in the craft or independent distilling sector. Unlike titans like Diageo or Pernod-Ricard, which have the necessary resources to pause production on brands in the face of unexpected cost snafus, the smaller labels usually have no choice but to suck it up and deal. “In March, we had to eat a 134 percent tariff on glass imports because we had to get product out the door,” Harris states. “It put us in a rough place.”
Some smaller distillers also fear the drop in exports and sales abroad may also compel larger brands and their distributors to increase their focus on sales and promotion through domestic on- and off-premise channels, which could further stifle a smaller label’s capacity for growth and profitability. “We rely on distributors to sell our products to retailers, and on the retailers to sell our products to consumers,” explains Philip Steger, founder and CEO of Brother Justus Whiskey Company in Minneapolis. “Even in the best of times, it is extremely difficult in this heavily regulated market dominated by a handful of brands owned by conglomerates for small independent brands to secure the share of mind and resources needed from the distributor and retailer tiers to reach customers,” Steger says. “The tariff and the trade war chaos of the last year turns all of this up to 11.”
Despite the residual effects on the small market, a big brand’s ability to minimize tariff impact through sales pivoting isn’t intentionally unscrupulous. It’s just business. Smaller, independent distilleries tend to acknowledge this. At the same time, some use this as a touchstone to highlight perceived shortcomings on how distilled spirits can be sold through the industry’s three-tier system, a strict regulatory process that requires the use of third-party distribution channels and prohibits direct-to-consumer spirits sales.
“Anything that limits big brands’ sales, such as retaliatory tariffs or boycotts, puts greater pressure on the distributors and retailers in the U.S. to make up for lost sales,” Steger says. “This inevitably results in distributors and retailers routing an even greater share of their resources to selling big brands and diverting resources away from supporting small independent brands. It’s not intentionally anti-craft or anti-small; it’s just the natural response to market pressure caused by structural imbalances in the regulated market.”
The Future
Nobody knows when the tariffs will go away, but there may be a faint glimmer of hope that it could happen sooner than later. On Nov. 5, the U.S. Supreme Court began deliberating whether or not Trump had the authority to enact tariffs via the IEEPA. A ruling against the President would strike down the tariffs; a ruling is pending as of this article.
If and when they are lifted, some feel the recovery will be less than immediate. “Tariffs are just one of many challenges facing distillers in the short to medium term,” says Cullins of Disaronno International. “I believe we are in the ‘new normal’ for a few more years and it will take that amount of time for course correction and recovery.”
Despite this hazy timeline, there is confidence the distilling industry will bounce back. Many believe alcohol’s nature as a social lubricant that’s historically unified people, forged bonds, and built communities is too strong to kill. For now, all the industry can do is use whatever resources it has to navigate through the morass while it holds hope for brighter days ahead.
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