Published by Global Banking & Finance Review®
Posted on February 3, 2025
4 min readLast updated: January 26, 2026
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Trump's tariffs may increase Canadian whisky costs in the US, affecting sales and market dynamics amid a trade war.
By Emma Rumney and Waylon Cunningham
LONDON/NEW YORK (Reuters) -Global makers of alcoholic drinks like Diageo are caught in the cross-fire of a major trade war as threatened tariffs -- postponed for a month-- could deal a hefty blow to an industry already struggling with falling sales.
U.S. President Donald Trump over the weekend signed executive orders imposing 25% tariffs on Canada and Mexico, the United States' two main trading partners. On Monday, after discussions with each country's leader, he postponed his decision on tariffs for one month.
With the U.S. pausing tariffs on Monday, Canada dropped retaliatory measures, such as 25% levies on a raft of U.S. imports, including beer, wine and bourbon. Similarly, Ontario Premier Doug Ford dropped his previous order to pull American-made liquor off the shelves in the province.
Key brands like Don Julio tequila and Jack Daniel's whiskey from producers like Diageo and Brown-Forman would become more expensive for U.S. and Canadian drinkers if importers hike prices to cover the cost of future tariffs. Some analysts estimated brands like Diageo's Crown Royal Canadian whisky would rise in price by as much as 10%, threatening to hurt sales.
U.S. tariffs would drive steep price hikes on imported booze like Canadian whisky at a time when financially stretched consumers are already cutting back. But while U.S. bourbon and whiskey producers could see a bump in domestic sales, their own export businesses could be curtailed by retaliatory tariffs.
"Given pressures on consumer budgets, such a price increase would likely lead to a shift in demand to cheaper/unimpacted products," Fintan Ryan, analyst at stockbroker Goodbody, said in a note.
For example, home-brewed beer or spirits might become more competitive as costs of foreign goods rise.
Ralph De La Rosa, president of Miami-based freight company Imperial Freight Brokers, which works with alcohol companies, said alcohol companies' options to offset tariffs would be limited.
"There really aren't too many mitigation strategies," he said, adding that spirit makers would have to decide how they handle the higher cost: pass it all on to consumers or use their own margin to absorb at least some of it, he continued.
Diageo declined to comment ahead of its results on Tuesday. Brown-Forman did not respond to requests for comment.
"At a time when the combined wine and spirits marketplace is down 5.5% in volume, the combination of tariffs and increased domestic pressure could have severe and negative effects on the U.S. beverage alcohol marketplace," the Wine & Spirits Wholesalers of America industry body said in a note published after tariffs were announced on Feb 1.
Brian Rosen, founder of alcohol investor InvestBev, said tariffs on foreign goods could boost U.S. spirits like U.S.-made whiskey as they become more price competitive.
But Jeff Quint, CEO of Cedar Ridge Distillery, a small bourbon maker in Swisher, Iowa, worried that any retaliatory tariffs imposed by Canada would cut off a key export market when production far outstrips domestic demand.
He feared this could prompt supply gluts and drive price wars as local producers struggle to sell all their stock domestically.
For others, the negative impact was immediate. Victor Yarbrough, chief executive officer of Brough Brothers Distillery, a small bourbon producer, had been in talks to have his products stocked in Canada - a key pillar of the firm's growth plan.
Following the tariffs, his Canadian partner axed the deal as a result of an instruction not to stock U.S. spirits.
For Diageo, whose Mexican tequila labels like Don Julio would also be at risk, a shift to cheaper products by U.S. consumers could equate to a cost of up to $600 million per year, or 3% of group sales, Goodbody's Ryan estimated, though analysts at Jefferies put this at more like 1.5%.
Diageo's shares closed over 2% lower on Monday.
The tariffs and retaliatory tariffs would threaten alcohol sales in all three markets-- the U.S., Canada and potentially Mexico-- which are among the highest alcohol-consuming countries on a per capita basis.
Shares of Constellation Brands, which makes Modelo and Corona beer for the U.S. market in Mexico, and Jack Daniel's maker Brown-Forman, also fell on Monday.
Brown-Forman Corp. CEO Lawson Whiting said in an investor call in December that previous European retaliatory tariffs on American whiskey were "a very painful and challenging time for us."
(Reporting by Emma Rumney)
The article discusses the impact of Trump's proposed tariffs on Canadian whisky prices in the US.
Tariffs could make US spirits more competitive domestically but harm export markets due to retaliatory measures.
Increased costs could lead to higher prices, reduced sales, and shifts towards cheaper alternatives.
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