Why Alcohol Is the New Weapon in U.S. Trade Wars (2025)
Disclaimer: This article presents a journalistic and educational analysis of recent and historical trade policy developments involving alcoholic beverages. All mentions of political figures, administrations, and international actions are based on public records, news reports, and official statements. The content is intended to inform readers about the strategic use of alcohol in trade negotiations and does not reflect an endorsement or criticism of any political party, leader, or government. The goal is to promote industry understanding through clear, well-sourced reporting.
Summary:
In 2025, alcoholic beverages have become central players in escalating global trade tensions between the United States and its major trade partners, including the European Union, China, and Canada. This in-depth report explores how iconic American products like bourbon, craft beer, and wine are being strategically targeted through retaliatory tariffs. Likewise, U.S. trade threats are putting pressure on key European and Canadian alcohol exports. The article analyzes the economic, political, and symbolic reasons alcohol is frequently used in trade retaliation, the effects on producers and supply chains, and the long-term risks for industry stability and global market access.
Key Points:
Alcohol Hits Sensitive Regions
High-profile alcoholic products like Kentucky bourbon and California wine are deeply tied to specific U.S. regions and economies. Targeting them with tariffs creates immediate political pressure on lawmakers who represent those communities, making alcohol a powerful lever in trade negotiations.
Visibility Drives Consumer and Industry Reaction
Unlike industrial components, alcohol is a consumer-facing product with emotional and cultural value. When prices spike or bottles disappear from shelves, the public notices. This visibility helps drive swift media coverage and outcry, which governments often use to increase negotiating leverage.
Tariffs Disrupt Global Supply Chains and Export Growth
Tariffs on alcohol ripple across the supply chain, from aluminum cans and malt to bottling and distribution. Small craft producers and global exporters alike face rising costs, halted expansion plans, and the loss of international market share. These disruptions threaten long-term growth for U.S. alcohol industries.
Introduction:
Alcoholic beverages have become an unlikely flashpoint in trade disputes between the United States and its major partners in 2025. From Kentucky bourbon to French wine, these products are being leveraged as strategic tools in tariff wars. Trading partners like the European Union (EU), China, and Canada are either targeting U.S. alcohol exports or facing U.S. tariffs on their own spirits and wines. Below, we explore the current alcohol-related tariff conflicts, the types of drinks affected, the impact on production and supply chains, and the economic and political motivations behind this spirited showdown. We also look at the historical context and the fallout for industries and consumers.
U.S.–EU Trade Tensions: Whiskey vs. Wine and Spirits
The transatlantic trade relationship has seen American whiskey and European wine caught in the crossfire of a broader tariff battle. In early 2025, the EU announced plans to reinstate a hefty 50% import tariff on U.S. bourbon and other American whiskeys by April 1[1]. This move was a retaliatory response to U.S. tariffs on steel and aluminum that had strained relations since 2018. American whiskey, including Kentucky bourbon and Tennessee whiskey, had previously faced a 25% EU tariff, which was suspended during negotiations, but the failure to reach a permanent metal trade deal led the EU to “snap back” the whiskey duties to 50% [1]. In response, U.S. officials threatened extreme counter-tariffs on European alcoholic exports. President Trump warned of a possible 200% tariff on all wines, Champagne, cognac, and other spirits from Europe if the EU went forward with its whiskey tax [2]. This tit-for-tat escalation turned bourbon and Bordeaux into bargaining chips, reflecting how alcohol has become a key friction point in the brewing trade war [3].
Types of alcohol affected:
Both sides targeted iconic products to maximize political pressure. The EU’s tariff list centers on American whiskeys (bourbon, Tennessee whiskey), a proud U.S. export [1]. In turn, the U.S. threat singled out European wines (French wine, Champagne) and spirits like cognac [2]. EU officials even signaled a “second wave” of tariffs could expand to U.S. wine, gin, liqueurs, fruit brandies, and cordials later in 2025 [1]. These choices are far from random; bourbon and whiskey are signature American products, while France’s wines and spirits are pillars of the EU economy. By aiming tariffs at these categories, each side hopes to hit the other where it hurts economically and politically.
Economic impact:
The stakes are high for distillers and vintners on both sides of the Atlantic. The EU accounts for roughly 40% of U.S. spirits exports, so a steep tariff can severely undercut U.S. whiskey sales in Europe [3]. In fact, when the EU first imposed a 25% whiskey tariff in 2018, American whiskey exports to Europe nosedived, shrinking from about $552 million in 2018 to around $440 million by 2021 (a ~20% drop) [4]. Producers finally saw relief when tariffs were suspended: during the suspension period, U.S. whiskey exports to the EU surged nearly 60% as the industry clawed back market share [5]. A return of tariffs threatens to erase these gains. European exporters are also nervous. The United States buys about 31% of EU wine and spirits exports, so a massive U.S. tariff on French wine, Scotch whisky, or Italian liqueurs would deal a serious blow to European producers [3]. France’s cognac industry, for example, is already on edge. French officials worry U.S. tariffs could hit cognac exports hard, especially since Chinese tariffs have also dented cognac sales recently in a separate EU-China spat [2].
Political pressure and negotiations:
Alcohol has been targeted in part because of its symbolic importance and geographic ties. European leaders deliberately picked Kentucky bourbon for retaliation to put pressure on political leaders from whiskey-producing states (Kentucky alone produces 95% of the world’s bourbon, a fact not lost on U.S. trade partners) [2]. Likewise, the Trump administration’s threat against European wine was aimed at France and Italy, where influential wine industries would press EU officials to relent. The strategy has not been without controversy. Even within Europe, there are doubts about using whiskey as a pawn. French Prime Minister François Bayrou admitted that targeting American bourbon “was probably mistaken,” noting it made Kentucky whiskey a trade scapegoat despite being unrelated to the steel dispute [2]. He urged talks to avoid an exchange of more damaging duties that could hit France’s own prized spirits. As of 2025, U.S. and EU negotiators are scrambling to find a compromise on metals to avert this “whiskey-for-steel” tariff spiral, while industry groups on both sides plead for a ceasefire.
U.S.–China Trade Conflict: Wine and Whiskey in the Crossfire
The United States and China remain locked in a trade war hangover from the late 2010s, and alcohol continues to figure in their tariff skirmishes. During the earlier rounds of the U.S.-China dispute, Beijing zeroed in on American alcoholic beverages as part of its retaliation. China currently imposes an extra 25% retaliatory tariff on U.S.-made whiskey and brandy (on top of an existing 5% base tariff), effectively taxing American spirits at about 30% [6]. Similarly, U.S. wines have been hit with multiple Chinese tariff hikes. By mid-2019, China had implemented three rounds of tariffs on U.S. wine (15% in early 2018, another 10% that fall, and a further 15% in 2019), compounding to a staggering total tax rate of roughly 93% on American wine imports [7]. These duties made U.S. wines prohibitively expensive in the Chinese market, causing U.S. wine exports to China to plunge, down 25% in 2018 alone as the trade war tariffs took hold [7]. American craft beers and other spirits also faced higher hurdles entering China, as Beijing sought to distribute pressure across iconic U.S. food and drink exports.
Strategic motivations:
China’s strategy in targeting alcohol is twofold. Economically, China is a massive and growing consumer market for alcoholic beverages, so restricting U.S. access puts tangible pain on American producers and encourages Chinese buyers to turn to alternate suppliers (like Australian or European wines, which benefited when U.S. wines became costlier). Politically, whiskey and wine are high-profile U.S. products with strong ties to agricultural communities; by hurting West Coast winemakers or whiskey distillers in states like Kentucky and Tennessee, Chinese tariffs aimed to motivate those industries to lobby Washington for relief. During the height of the trade war, iconic American goods such as bourbon, Tennessee whiskey, Harley-Davidson motorcycles, and Levi’s jeans were deliberately singled out by retaliatory tariffs [8]. This sent a message by hitting emblematic industries and politically important regions of the United States. In practice, the tariffs succeeded in sharply reducing U.S. alcohol exports to China. American winemakers reported being priced out of the “fastest-growing wine market in the world” due to the cumulative 40% tariff increases, allowing competitors from Europe, Chile, and elsewhere to fill the gap [7]. U.S. spirits like bourbon and rum also lost market share in China while facing about 30–35% total import tariffs (compared to much lower duties for rival exporters) [6].
Current status:
As of 2025, many of these Chinese tariffs on U.S. alcohol remain in place, since a comprehensive resolution to the U.S.-China trade war has yet to be reached. Although the 2020 “Phase One” trade deal led China to pledge more purchases of U.S. farm goods (including spirits), it did not remove the retaliatory duties on alcohol. American alcohol exporters thus continue to operate at a steep disadvantage in China. The effects are evident in supply chains: some U.S. wineries have scaled back distribution in China or focused on other Asian markets, while U.S. distilleries report that Chinese orders remain far below pre-trade war levels. On the flip side, China’s consumers have felt little shortage, simply shifting to imported wines from countries not tariffed or turned to domestic Chinese labels. This illustrates how alcohol, once a booming U.S. export to China, has become a casualty of the prolonged U.S.-China tariff conflict, with American producers hoping for diplomatic progress that could reopen this lucrative market.
U.S.–Canada: Neighbors in a Tariff Tiff over Alcohol
Trade frictions have also bubbled up between the U.S. and Canada, often drawing alcohol into the mix. Back in 2018, when the U.S. first levied steel and aluminum tariffs on Canada (under a “national security” justification), Canada retaliated in kind, and it included American alcoholic beverages on its hit list. Starting July 1, 2018, Canada imposed a 10% tariff on imports of U.S. whiskey [9]. The measures targeted a range of American goods from steel to ketchup and bourbon. This initial dispute was eventually resolved by mid-2019 when the U.S. lifted the metal tariffs on Canada, leading Ottawa to drop its retaliatory duties.
Fast forward to 2025, and trade tensions have reemerged in a new form. The prospect of renewed U.S. tariffs on Canadian products (again over security or other disputes) prompted Canada to threaten a robust response. Canadian officials signaled they would respond dollar-for-dollar with tariffs on U.S. goods, and alcohol was among the first to feel the impact [10]. Several Canadian provinces took the extraordinary step of boycotting American alcohol even before tariffs took effect. Ontario, for example, directed the Liquor Control Board of Ontario (LCBO) to “immediately cease imports of U.S. alcohol and stop selling American products” in its government-run stores [10]. Other provinces like New Brunswick and Québec quickly followed suit, ordering government liquor retailers to pull U.S.-made wine, beer, and spirits off the shelves. This was a dramatic show of solidarity intended to put pressure on U.S. exporters and signal that Canada “means business” in the face of U.S. trade actions.
Bottles of Kentucky bourbon remain on the shelf at a Nova Scotia liquor store as staff begin removing all American-made alcohol from displays in early 2025. Canadian liquor retailers were urged to “look for local instead,” highlighting how domestic products would replace U.S. brands amid the tariff standoff. The sign in the image (“Look for local instead!”) reflects a campaign to promote Canadian whisky, wine, and beer while U.S. alcohol is subject to retaliation. Kentucky’s bourbon makers have been alarmed by these developments. Canada is a significant export market for U.S. spirits, and industry leaders worry that pulling U.S. bottles from shelves will cause lasting damage. In an interview with Business Insider, Eric Gregory, president of the Kentucky Distillers’ association noted that tariffs would detrimental to the growth of not just the distilleries in Kentucky, but have consequences to the state itself. Kentucky produces 95% of the worlds’ bourbon [10].
The political motivation here is clear: key U.S. industries and regions (like Kentucky’s bourbon country) are being squeezed to influence U.S. trade policy. Canadian leaders, including Former Prime Minister Justin Trudeau, framed their response as a necessary defense. Trudeau announced that if the U.S. proceeded with tariffs, “Canada will…respond with 25 percent tariffs against C$155 billion of American goods”; a massive retaliation package [11]. By making bourbon and other conspicuous U.S. goods part of this package, Canada hopes influential American stakeholders will push back against Washington’s tariffs. The U.S.-Canada alcohol skirmish in 2025 thus underscores how even close allies can end up in tit-for-tat trade measures involving liquor, with each side leveraging consumer loyalties (Canadian shoppers favoring local brews, American distillers leaning on their government) to strengthen their position.
Impact on Alcohol Production and Supply Chains
Beyond the headlines of tariffs and retaliation, these trade policies are rippling through the production process and supply chains of the alcohol industry. Ingredient costs and availability are one area of impact. For instance, U.S. breweries and beverage producers have been hit by the higher cost of aluminum and steel; indirect fallout from tariff policies. When the U.S. imposed tariffs on imported aluminum (10% in 2018, later raised to 25%), it drove up the price of aluminum cans and packaging for beer and soda. The American beverage industry, including thousands of craft brewers, collectively paid hundreds of millions of dollars in extra costs as a result. Within a year of the initial aluminum tariff, U.S. brewers had paid an estimated $250 million in additional costs for cans, a figure that ballooned to over $1.4 billion by 2022 [12]. These costs strained brewers’ supply chains and forced difficult choices: absorb the cost (hurting margins), raise beer prices for consumers, or delay investments. The Beer Institute noted frustration that even beer cans made mostly from recycled U.S. aluminum saw price hikes because suppliers peg prices to the now higher tariff-inflated market rate [12]. In short, metal tariffs intended to protect U.S. smelters ended up taxing every beer can, illustrating a classic supply chain squeeze.
Tariffs on ingredients themselves have also occurred. In the U.S.-China dispute, China targeted various U.S. agricultural exports; not just finished wine, but also raw inputs like sorghum and barley (grains used in brewing and distilling). American barley farmers, for example, saw their crop face Chinese tariffs, which reduced demand from one of the world’s largest beer markets. Large malting companies such as Canada Malting Co in Alberta, Gambrinus in British Columbia, Prairie Malting in Saskatchewan and Rahr in Alberta all supply a variation over 53% of malt used in alcohol production in the US. This is over 302k metric tons of malt [18]. Hops are also on the chopping block, with proposed tariffs by Canada. So far, American winemakers reliant on oak barrels from France watched haven’t been directly tariffed, but the uncertainty causes wineries to hedge their bets and sometimes stockpile critical supplies.
Overall, these trade policies inject volatility into alcohol supply chains. Producers have difficulty planning production volumes when access to key markets can vanish overnight due to a tariff. This uncertainty can deter long-term investments. For example, a distillery might postpone building a new barrelhouse if a major export market is under threat, or a vineyard might scale back planting new acreage if overseas demand is shaky. Even after tariffs are lifted, it takes time to rebuild relationships and distribution networks. In some cases, competitors from other countries permanently capture market share. Thus, the impact on production goes beyond immediate price increases: it alters strategic decisions, supply contracts, and growth trajectories in the alcohol sector.
Why Target Alcohol? Economic and Political Motivations
Alcoholic beverages have emerged as a favorite target in trade disputes for several reasons rooted in economics and politics. Politically, alcohol hits home in key constituencies. Iconic U.S. products like bourbon whiskey, Tennessee whiskey, and Napa Valley wine are closely associated with specific states and regions; Kentucky and Tennessee for whiskey, California for wine. Tariffs on these goods are a direct hit to the economic interests of those areas. Trade partners calculate that hurting those industries will spur powerful politicians and lobbyists to demand a resolution. The EU’s focus on Kentucky bourbon was designed to get the attention of U.S. lawmakers from bourbon country [2]. Similarly, when China slapped tariffs on American wine, it put pressure on California’s influential wine industry. On the U.S. side, threatening tariffs on French wine and Scotch whisky is a way to rattle Europe’s big players (France and the UK) who have political clout in Brussels and London. In essence, alcohol tariffs are leverage; they create domestic pressure on the opponent’s leaders.
Cultural symbolism and consumer visibility also make alcohol an attractive target. Unlike some industrial parts or obscure chemicals, products like Jack Daniel’s whiskey or Bordeaux wine are well-known to the public. When their prices skyrocket or they disappear from shelves, consumers notice. This generates public outcry, which adds to political pressure. For example, the mere proposal of a 200% tariff on European wine in the U.S. caused alarm among American wine importers and consumers, who warned it would devastate wine selections and raise prices overnight [14]. That reaction is exactly why such products are threatened. It forces a broad base of people (from connoisseurs to restaurant owners) to pay attention and possibly push back. Additionally, alcoholic beverages often have high profit margins and brand loyalty, meaning tariffs on them can raise significant revenue (for the government imposing the tariff) while also inflicting pain on the exporter’s branded industry.
Another motivation is reciprocity and fairness arguments. Trade negotiators sometimes target foreign alcohol to retaliate for what they see as unfair practices in the other country’s market. For instance, U.S. officials have long complained about barriers to exporting alcohol: Canada’s tightly controlled provincial liquor boards historically gave preference to local producers (e.g. earlier, some provinces limited shelf space for U.S. wines). By imposing tariffs on Canadian alcohol or including it in a retaliation list, the U.S. signals that such barriers won’t be tolerated. Likewise, European officials resent U.S. tariffs that affect their wine and spirits, noting that since 1997 the U.S. and EU had a “zero-for-zero” pact eliminating spirits tariffs, a pact broken by the U.S [1]. Thus, part of the motivation is to restore balance or punish perceived trade infractions by hitting a prized export of the other side.
Finally, there is a straightforward economic angle: revenue and protectionism. Alcohol imports are a lucrative source of tax revenue (historically, tariffs on spirits and wine were a major income source for governments). When the U.S. threatens to tariff European alcohol, it dangles a prospect of significant tax income (albeit at the expense of consumers paying more). Protectionist minded policymakers also see tariffs on foreign alcohol as a way to give domestic producers an edge at home. For example, a steep tariff on French wine could drive U.S. restaurants and retailers to stock more American wines instead, theoretically boosting local wineries. In practice, these gains are limited and consumers may simply pay higher prices rather than switch preferences, but the protectionist impulse is nonetheless a factor in targeting alcohol. In summary, alcohol sits at the nexus of strong economic interests, cultural cachet, and political influence, making it a potent tool in trade negotiations and disputes.
Historical Context: Alcohol in Past Trade Disputes
While 2025’s trade fights have thrust alcohol into the spotlight, the tactic is not entirely new. Alcoholic beverages have periodically surfaced in trade wars and negotiations over the years, often as part of broader retaliatory lists. A notable precedent was set in 2018. After the U.S. imposed metal tariffs on the EU, Canada, and others, those partners retaliated by slapping tariffs on quintessential Americana, including bourbon whiskey[8]. June 2018 saw the EU enact a 25% tariff on American whiskey (then including bourbon and Tennessee whiskey), marking the first time transatlantic spirits trade had seen tariffs in decades[16]. This broke the aforementioned 1997 zero-tariff agreement on spirits, which had facilitated a 450% growth in EU-U.S. spirits trade from 1997 to 2018 [15]. American distillers suddenly found themselves paying duties to send whiskey to Europe, a harsh reversal after years of open trade.
Canada’s 2018 retaliation likewise included a 10% duty on U.S. whiskey, and even Mexico imposed tariffs on American bourbon (Mexico targeted whiskey at 25%) [9]. These moves were calculated: whiskey is an iconic U.S. export and the industry has political heft. The immediate impact was a slump in exports and concern in states like Kentucky. It also set the stage for industry advocacy; the Distilled Spirits Council and other groups campaigned vigorously for the removal of these tariffs, citing lost sales and jobs. Their efforts bore fruit by late 2021 when the U.S. and EU negotiated a truce to suspend the whiskey tariffs (and the related steel dispute), and similar deals were reached with Canada and Mexico earlier. That period (2018–2021) is instructive: it showed how alcohol tariffs can be a bargaining chip that eventually gets traded away when bigger issues (like steel quotas or trade agreement negotiations) are settled.
Alcohol has featured in other trade spats as well. The long-running Boeing–Airbus dispute between the U.S. and EU (a fight over aircraft subsidies) led to tariffs on a range of products in 2019 and 2020. The U.S., given WTO permission to retaliate against the EU, chose to tariff European wines (for example, certain French and Spanish wines) and single-malt Scotch whisky at 25% [17]. The EU, in its corresponding retaliation in 2020, targeted U.S. exports such as rum, brandy, and vodka at 25%. These measures hurt niche markets (Scotch whisky exports to the U.S. fell, and American rum makers saw European sales dip) until a cease-fire was agreed in 2021. Even the digital services tax dispute in 2019 saw threats of 100% tariffs on French Champagne and wine by the U.S., to pressure France into backing off a tech tax. Although that was averted, it reinforced the pattern: when unrelated disputes arise, alcohol is often pulled into the fray as leverage.
Historically, tariffs on alcohol were common in more distant eras (for example, high tariffs on imported spirits in the 19th century protected domestic distillers and funded governments). But in the modern era of global trade pacts, advanced economies had largely eliminated or reduced alcohol duties through agreements, until more recent situations. The year 2018 was a turning point that ended a long calm alcohol trade. By 2025, we see a recurrence of similar battles, suggesting that whenever trade tensions escalate, wine, whiskey, and beer are never far from the negotiating table. This historical context highlights that the current situation is part of a recurring cycle: alcohol becomes a pawn in trade wars, industries suffer and lobby, and eventually compromises are sought to remove these politically sensitive barriers.
Effects on U.S. Alcohol Industry and Consumers
The ongoing tariff conflicts have had tangible consequences for U.S. alcohol industries, distributors, and consumers. For American producers, foreign tariffs on their goods translate directly into lost sales and market share abroad. Distilleries big and small have felt the pinch. When Europe imposed its whiskey tariff, small craft distillers in the U.S., who had just begun exporting bourbon or rye to EU markets, suddenly found their products priced out, since a 25% (and now potentially 50%) markup made them far less competitive. Many of these businesses scaled back expansion plans or shifted focus to the domestic market, losing growth opportunities. Large producers like Brown-Forman (maker of Jack Daniel’s) and Beam Suntory (maker of Jim Beam) reported flat or declining European sales during the tariff period, and warned of potential job impacts if tariffs persisted. The wine sector similarly saw U.S. exports to China dwindle; Napa Valley wineries that once saw China as a promising growth market had to contend with their wines effectively doubling in price for Chinese consumers, leading to a collapse in orders. Some U.S. wineries ended up with surplus inventory or had to re-route wines to alternative markets at discounted prices.
Distributors and retailers have also been affected. U.S.-based importers of European alcohol faced whiplash from tariff threats. For example, an importer of French wine in New York had to consider the risk that a container of Bordeaux might land in the U.S. and suddenly incur a 100% or 200% duty, wiping out any profit. This uncertainty caused some importers to hold off on orders or diversify their sourcing to non-EU countries. Domestic distributors who export American spirits to Canada or Europe likewise struggled; their overseas partners either cut orders or demanded deep discounts to offset the tariff cost. In some cases, distribution agreements were suspended until trade conditions improved. Retailers felt the effects when certain products became scarce or expensive: European cheeses and wines subject to tariffs saw price hikes in U.S. stores, and European shop owners reported higher prices for American bourbon.
For consumers, the tariff battles have meant higher prices and reduced choices, albeit unevenly. European spirits lovers have seen the price of American whiskeys climb due to the EU’s tariff. A bottle of Kentucky bourbon in Paris or Berlin might cost significantly more than it did pre-tariff, leading some consumers to switch to other whiskies (like Scotch or Irish, which aren’t tariffed) or simply buy less. During the Airbus dispute, U.S. shoppers did experience about a 25% increase in prices for certain Scotch whiskies and cognacs. Many retailers tried to spread the cost or stock up before tariffs hit, but inevitably some costs passed through. If the 2025 threats were to materialize, U.S. wine enthusiasts could see French wines triple in price, effectively pricing all but the wealthiest out of the market for those imports. This kind of scenario causes market distortion: consumers might reluctantly turn to other wines or simply buy less, and once-luxury items become ultra-premium.
Additionally, the unpredictability of tariffs has its own cost for consumers and businesses: uncertainty. With trade tensions seesawing, businesses had to constantly adjust, and consumers couldn’t be sure if their favorite bourbon or Champagne would suddenly jump in price next month. This uncertainty sometimes led to panic-buying or stockpiling. In late 2019, for example, some U.S. wine importers and collectors rushed to buy French wines when a steep tariff threat loomed, fearing that future supplies would be unaffordable. Likewise, European distributors stocked up on American whiskey ahead of the 2025 deadline [13]. These distortions can temporarily boost sales (as in the rush to beat tariffs) but are usually followed by slumps, whicih can harm long-term stability.
In summary, the tariff disputes have introduced volatility and costs that cascade down from producer to consumer. U.S. alcohol industries have lost export revenue and seen their international competitiveness undermined. Distributors have grappled with disrupted supply lines, and drinkers have faced higher prices or limited selections. While some domestic producers (like U.S. wineries) might enjoy a short-term home-market boost if imports are curtailed, those gains often do not make up for lost export potential. The net effect tends to be negative for the overall industry and for consumers who end up with fewer choices. It’s a classic case of trade wars having no true winners in the alcohol sector, just varying degrees of loss and adaptation.
Conclusion: A Brewing Storm Over Booze
In 2025, alcohol has unquestionably become a central issue in U.S. trade disputes, a development few would have predicted in calmer times. Whiskey, wine, beer, and spirits are no longer just commodities or cultural artifacts; they are bargaining chips in high stakes negotiations. The current conflicts with the EU, China, and Canada all illustrate a common theme: when diplomatic relations sour over trade, alcoholic beverages are quickly pulled into the fray, either as targets or as leverage. The types of alcohol affected range widely, but they tend to be the flagship products of each side, chosen for maximum impact. This strategy has ripple effects through production and supply chains, raising costs for producers and prices for consumers. The motivations behind targeting alcohol mix economic calculus with political theater, it’s about pressuring counterparts by hitting treasured industries.
History shows that this is not the first round of such tactics, but the frequency and scale of alcohol-related tariffs in recent years are unprecedented in the modern trade era. The historical context underscores that while these tariffs can be imposed swiftly, they often take years of negotiation to unwind, during which businesses and workers bear the cost. For the U.S. alcohol industry, from Kentucky distilleries and California wineries to countless craft brewers, the stakes are enormous. Export markets carefully cultivated over decades can evaporate overnight, and domestic disruptions can alter consumer habits in the long run. Reactions from industry groups and officials highlight the urgency of the situation: there is widespread agreement among producers and many politicians that alcohol should not be a casualty of unrelated trade fights.
As of now, the outcome of these disputes remains uncertain. Optimists hope that cooler heads will prevail and that the U.S. and its partners will reach agreements (on steel, on fair trade practices, etc.) that allow the removal of tariffs on alcohol. Indeed, there are active negotiations and some signs of willingness to find a compromise; nobody wants to see thriving industries harmed indefinitely. Pessimists warn, however, that trade wars have their own momentum and that alcohol could remain a pawn as long as larger issues stay unresolved. In the meantime, the U.S. alcohol sector and its consumers are caught in the middle, raising a glass to resilience but also bracing for more challenges ahead. One thing is clear: in 2025’s turbulent trade environment, alcohol has proven to be more than just a happy hour beverage, it’s a strategic tool wielded by nations, and its role in these disputes will shape the industry’s future for years to come.
References
The Spirits Business. (2025, March 4). EU to slap 50% tariff on American whiskey. https://www.thespiritsbusiness.com/2025/03/eu-to-slap-50-tariff-on-american-whiskey/
Reuters. (2025, March 16). French PM says EU tariff on American bourbon ‘probably mistaken’. https://www.reuters.com/business/retail-consumer/french-pm-says-eu-tariff-american-bourbon-probably-mistaken-2025-03-16/
Reuters. (2025, March 13). Trump threatens 200% tariff on European wine if EU does not remove whiskey tariff. https://www.reuters.com/markets/trump-threatens-200-wine-tariff-if-eu-does-not-remove-whiskey-tariff-2025-03-13/
The Drinks Business. (2025, March). US whiskey rushes to EU before 50% tariffs hit – but will it be enough? https://www.thedrinksbusiness.com/2025/03/us-whiskey-rushes-to-eu-before-50-tariffs-hit-but-will-it-be-enough/
Men’s Journal. (2025, March 18). EU Tariffs Could Hit U.S. Whiskey Hard: How the Alcohol Industry is Responding. https://www.mensjournal.com/food-drink/whiskey-spirits-european-union-tariffs-effect/
Distilled Spirits Council of the United States. (2024, October). Submission regarding foreign trade barriers for the 2025 NTE report. https://www.distilledspirits.org/wp-content/uploads/2024/10/Submission-of-the-Distilled-Spirits-Council-of-the-US.-Comments-Regarding-Foreign-Trade-Barriers-for-the-2025-NTE-Report-Oct-2024.pdf
Wine Institute. (n.d.). Latest China tariff increase on U.S. wine. https://wineinstitute.org/statement/latest-china-tariff-increase-on-u-s-wine/
Tax Foundation. (2019, August 14). Tariffs are a tax on exports. https://taxfoundation.org/blog/tariffs-tax-on-exports/
The Spirits Business. (2018, July 2). Canada slaps 10% tariff on American whiskey. https://www.thespiritsbusiness.com/2018/07/canada-slaps-10-tariff-on-american-whiskey/
Business Insider. (2025, March). Kentucky bourbon makers upset over Canada yanking bottles off shelves amid trade dispute. https://www.businessinsider.com/kentucky-bourbon-makers-upset-canada-yanking-bottles-off-shelves-trade-2025-3
Shine News. (2025, March 4). Canada will impose 25% retaliatory tariffs on U.S. goods, says Trudeau. https://www.shine.cn/news/world/2503040352/
Reuters. (2025, March 12). Bad news for American beer drinkers as aluminum tariffs kick in. https://www.reuters.com/markets/commodities/bad-news-american-beer-drinkers-aluminium-tariffs-kick-andy-home-2025-03-12/
Fortune. (2025, March 13). U.S. whiskey makers flood EU market ahead of tariffs. https://fortune.com/2025/03/13/us-whiskey-makers-to-flood-eu-market-ahead-of-tariffs/
Wine Spectator. (2025, March). President Trump threatens 200% tariffs on European wines. https://www.winespectator.com/articles/president-trump-threatens-200-percent-tariffs-on-european-wines
The Spirits Business. (2025, March 4). SpiritsEurope urges U.S. and EU to avoid trade war. https://www.thespiritsbusiness.com/2025/03/eu-to-slap-50-tariff-on-american-whiskey/
Distilled Spirits Council of the United States. (2022, March). U.S.-EU-UK tariffs timeline: Toasts Not Tariffs Coalition. https://www.distilledspirits.org/wp-content/uploads/2022/03/US-EU-UK-Tariffs-Timeline-Toasts-Not-Tariffs-Coalition-2.24.22.pdf
The Guardian. (2019, October 2). U.S. may impose $7.5bn of tariffs on EU over Airbus subsidies. https://www.theguardian.com/business/2019/oct/02/us-may-impose-75bn-of-tariffs-on-eu-over-airbus-subsidies
1. Agriculture and Agri-Food Canada. (2023, October 4). Customized report service – Global food and drink product trends containing malt-based and germ cereal. Government of Canada. https://agriculture.canada.ca/en/international-trade/market-intelligence/reports/customized-report-service-global-food-and-drink-product-trends-containing-malt-based-and-germ-cereal
CTV News Vancouver. (2025, March 25). B.C. brewers brace for ‘Armageddon’ as Canada eyes tariff on hops. https://www.ctvnews.ca/vancouver/article/bc-brewers-brace-for-armageddon-as-canada-eyes-tariff-on-hops/