Kentucky distillers hope to begin trade talks as Canada drops reciprocal tariffs

LOUISVILLE, Ky. (WDRB) -- Kentucky distillers are hopeful to begin negotiations on a permanent trade deal after Canada announced it would be removing reciprocal tariffs on bourbon and many other goods.

The Kentucky Distillers Association said it hopes the move will jump-start those negotiations as it looks forward to the day when Canadians can toast the return of Kentucky bourbon to their provinces.

"We applaud Prime Minister Mark Carney's decision to restore reciprocal zero-to-zero tariffs for Kentucky bourbon and many other remaining goods covered under the USMCA," the KDA said, in part, in a statement Friday. "We hope this action will jump-start negotiations on a permanent trade deal, benefiting both American businesses and Canadian consumers seeking to enjoy America's only native spirit."

After the tariffs initially went into effect, some Canadian stores pulled bourbon off their shelves and saw sales drop drastically. Prior to the tariffs, Canadians bought about $40 million worth of bourbon each year—which accounts for less than 1% of all bourbon sold.

After Canada's announcement last week about removing the tariffs, President Donald Trump said he had a "very good call" with Carney.

"We are working on something. We want to be very good to Canada. I like Carney a lot. I think he's a very good person," Trump said in the Oval Office. "I am fighting for the United States, and Canada and Mexico have taken a lot of our business over the years."

Carney, meanwhile, said Trump told him that lifting the tariffs would reset trade negotiations. The United States-Mexico-Canada trade pact, or USMCA, is up for review in 2026. Carney called the pact a unique advantage for Canada at a time when it is clear that the U.S. is charging for access to its market.

Carney said the commitment of the U.S. to the core of USMCA means that over 85% of Canada-U.S. trade continues to be free of tariffs. He said the U.S. average tariff rate on Canadian goods is 5.6% and remains the lowest among all its trading partners.

Canadian and Mexican companies can claim preferential treatment under the USMCA.

Canada and China are the only countries that have retaliated against Trump in his trade war. Canada imposed 25% tariffs on a long list of American goods in March, including oranges, alcohol, clothing and shoes, motorcycles and cosmetics.

Former Prime Minister Justin Trudeau initially put on retaliatory tariffs in response to U.S. tariffs, but before the U.S. tariffs were applied the Trump administration exempted goods covered by the free trade deal.

Most imports from Canada and Mexico are still protected by the USMCA, but U.S. Commerce Secretary Howard Lutnick has said, “I think the president is absolutely going to renegotiate USMCA.”

Preserving the free trade pact will be critical for Canada and Mexico. More than 75% of Canada’s exports go to the U.S. while more than 80% of Mexico’s exports go there.

Trump has announced some sector-specific tariffs that do apply for Canada despite the USMCA — known as 232 tariffs — which are having an impact on the Canadian economy. There is a 50% tariff on steel and aluminum imports, for example.

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