After President Donald Trump instituted and raised tariffs against Canada, Mexico and China, Canada quickly responded with tariffs of its own.
On Tuesday, Canadian Prime Minister Justin Trudeau said Ottawa would be placing 25% on more than $20 billion worth of U.S. imports immediately. An additional $86 billion worth of products would be instituted in the coming weeks.
Trudeau also encouraged Canada to steer away from buying U.S.-made products, singling out Florida orange juice and Kentucky bourbon specifically.
In Canada’s most populous province of Ontario, Premier Doug Ford restricted the purchasing and sale of U.S.-made alcohol within the province.
“As part of Ontario’s response strategy to U.S. tariffs, the government of Ontario has directed LCBO to take operational steps to implement restrictions on all U.S. beverage alcohol sales and related imports into Ontario, effective immediately,” said in a statement on Liquor Control Board of Ontario’s website.
The Liquor Control Board of Ontario (LCBO) is responsible for importing all U.S. alcohol sold within the province.
The press release said that accounts for “annual sales of up to $965 million” and that they sell “more than 3,600 products from 35 U.S. states.”
In a Tuesday news release Eric Gregory, president of the Kentucky Distillers’ Association, said, “retaliatory measures against bourbon harm these markets and jeopardize growth for years to come, including the unjust and disproportionate removal of American spirits from retail shelves and prohibition on new purchases of alcohol from American companies.”
On a call with shareholders Wednesday, leaders with Louisville-based distiller Brown-Forman didn’t make mention of the tariffs and related sales restrictions until a shareholder asked about it.
“Canada’s not a massive [country] for Brown–Forman,” CEO Lawson Whiting said in response. “It’s around 1% of our sales, we can withstand. It’s disappointing that some of the consumers aren’t gonna be able to get our bottle of Jack Daniels up there because it’s a big brand in Canada and popular. But we will see how this plays out.”
Whiting said the company would have to wait and see how Mexico will respond to tariffs.
Royce Neeley is owner and master distiller at Neeley Family Distillery, a mid-tier distiller operating in Sparta, Ky.
Neeley runs the distillery with his father and said his family has been producing spirits both legally, and at times illegally, for decades.
He said tariffs will impact part of his family’s production process.
“When I saw that the tariffs were potentially coming, I started calling grain suppliers. How would this affect our grain? Could make our rye grain go up,” Neeley said. “Looks like it's going to make corn and wheat possibly go down, which would be great for us.”
Neeley doesn’t have an issue with response tariffs from the country’s northern neighbor. But it’s other parts of Canada’s reaction, in particular the Ontario government’s, that he said are disappointing.
“It's one thing to put a tariff back on America, you know, on bourbon. I'm actually fine with that. If that's the retaliation they want to do to what we're doing, that makes sense to me,” Neeley said. “But for Canada to just pull it off the shelf, I thought was pretty appalling.”
Neeley said while bourbon producers will feel some of the impacts of retaliatory tariffs and restrictions, Canadian consumers will be those negatively affected.
“So really, what you're doing is hurting your consumers, because now they can't drink Kentucky bourbon,” Neeley said. “I guess they're gonna have to drink Crown Royal. And God knows, nobody wants to drink Crown Royal.”
Ontario isn’t the only province seemingly pulling back from the state’s bourbon industry.
Victor Yarbrough, CEO of Louisville whiskey company Brough Brothers, said the company had a recent distribution deal in New Brunswick paused indefinitely.
“We just had Zoom calls and scheduling the meeting in person, and about a week and a half, two weeks later, it's like we've been asked to pause all discussions, and we were taking everything off the [Canadian] shelves as well,” Yarbrough said.
While the deal coming to a pause wasn’t ideal, he said he doesn’t fault Canadian officials for their reaction.
“You can't control how someone else reacts when you created an issue,” Yarbrough said. “You can't control how some of us react, so egregious or not, this is where we are.”
He said that the company will look to expand to unaffected international markets and continue expanding within the U.S.
“Basically, it's a case of, hey, let's focus on these other areas, these other markets, when we're able to return our attention back to the EU or back to Canada, we'll do that,” Yarbrough said. “We'll figure out how to pivot and what makes sense going forward with these tariffs.”
Despite not agreeing fully with Canada’s approach to responding to tariffs, Neeley, with the distillery in Sparta, doesn’t see the back and forth having a lasting impact on industry relations.
“At the end of the day, for us in Kentucky, we're all businessmen,” Neeley said. “We want to maintain good relationships, you know. Once again, Canada is only hurting more than the high-end business, they're hurting employees. They're hurting the guys that make the barrels. They're affecting that. And on the other side for us, it's also affecting the consumers of Canada.”
Neeley said he and other Kentuckians don’t have any problem selling bourbon to Canadians and he hopes Canadians don’t have a lingering problem with people in the commonwealth.
