An unwanted double: US sales fall for American whiskeys as threats of a trade war heat up

Like a watered-down drink, domestic sales for American whiskeys were unsatisfying in 2024, as inflation reined in consumer spending on some distilled spirits. But it's tariffs that loom as one of the stiffest challenges ahead, threatening to deplete sales in key foreign markets, an industry group said Tuesday.

Brewing trade conflicts with Canada and Mexico risk driving up the price of U.S. spirits in those markets. The biggest risk is in the European Union, where tariffs are set to resume April 1 at double the rate on American whiskey producers, who again find themselves ensnared in a trade dispute over steel and aluminum. The new tariff would undo the strong rebound in American whiskey sales in Europe since a 25% EU tariff was suspended a few years ago, the Distilled Spirits Council said.

“The reimposition of these tariffs at a 50% rate would gut this growth and do irreparable harm to distillers large and small,” Chris Swonger, the council's CEO, said of the EU. "It would be a catastrophic blow that will force many distillers out of our largest export market.”

Talk of tariffs cast a shadow over the council's report on 2024 U.S. spirits sales, which revealed a drop in domestic sales for the American whiskey category, which includes bourbon, Tennessee whiskey and rye whiskey. The council didn't break out sales for each type of whiskey.

As President Donald Trump pushes to reset global trade, U.S. spirits can be a high-profile target for retaliation. During trade conflicts in Trump's first term, American whiskey exports to the EU plunged by 20%, the council said. Once the tariff was suspended, those exports surged by 60%, it said.

Canada, another key export market for American spirits, initially ordered tariffs on American imports, including beverages, until a reprieve was announced last week. Before the pause, authorities in several provinces said they planned to remove American liquor brands from government store shelves.

Trump has alternately said he sees import taxes as tool to force concessions on issues such as immigration, but also as a source of revenue to help close the government’s budget deficit.

But anxiety is now high among whiskey producers and their supporters, many of them in states that voted overwhelmingly to return Trump to the White House. That includes Kentucky, where 95% of the world's bourbon supply is crafted and where a record 14.3 million barrels of bourbon were aging at the start of 2024, according to the Kentucky Distillers’ Association.

The renewed tariff threats arrive with Boundary Oak Distillery in central Kentucky trying to establish a foothold in the EU to augment its domestic sales in 12 to 15 U.S. states.

“We’re trying very hard to make a presence," Brent Goodin, the distillery’s owner, said by phone this week. "Craft products, especially craft bourbons, are appreciated all over the world.”

His family-owned craft distillery shipped about 200 cases of its bourbon and lavender whiskey to Lithuania last fall, he said. He's preparing to send another shipment soon, having spread distribution to Poland and with hopes of cracking what he sees as a potentially big market in Hungary, he said.

It all could come crashing down if his products get hit with a 50% tax.

“That would wipe out the market," Goodin said. "That would pretty much kill it.”

Spirit exports come from 45 states, and American whiskeys account for 63% of all U.S. spirits exports, the council said. The spirits industry is hoping cooler heads prevail to produce trade deals that keep their products from getting entangled again in back-and-forth tariffs.

It comes as spirits producers encounter headwinds at home in the U.S.

Overall, the spirits industry maintained its advantage in U.S. market share but its revenues slipped in 2024, the council said. Spirits supplier sales in the U.S. fell 1.1% to total $37.2 billion, while volumes rose 1.1% to 312.2 million 9-liter cases, it said.

Revenue and volumes for super premium spirits, which fetch the highest prices, fell last year as inflation-weary buyers picked slightly less-expensive options. The combination of high inflation and interest rates forced many to "reduce spending on little luxuries like distilled spirits,” Swonger said.

The industrywide results reflect a return to more normal domestic levels following sales spikes during the COVID-19 pandemic, Swonger said. Another challenge is that younger adults appear to be imbibing less.

Domestic sales of American whiskeys fell 1.8% in 2024 to total $5.2 billion in revenue, the council said.

Vodka sales were flat, totaling $7.2 billion, while tequila and mezcal sales rose 2.9% to total $6.7 billion last year, the council said. Sales of premixed cocktails, including ready-to-drink spirits products, surged 16.5% to $3.3 billion, it said.