(WKYT) – President Donald Trump on Monday imposed 50% tariffs on most Canadian goods, a move that could strain relations with a top U.S. trading partner and put new pressure on Kentucky businesses, including the state’s bourbon industry.
Trump said Canada has unfairly discriminated against U.S. autos, alcohol and dairy products. The White House said all but two Canadian provinces and territories have halted the purchase, distribution or retailing of U.S. alcoholic beverages without imposing similar restrictions on other countries, which the administration characterized as discrimination against American products.
Sales declines cited as justification
The White House also pointed to steep declines in sales: From March 2025 through February 2026, Canadian imports of U.S. alcoholic beverages fell about 81%, or $582 million, compared with the same period a year earlier.
Trump signed three proclamations to impose the tariffs under Section 338 of the Trade Act of 1930, according to an administration official who insisted on anonymity to preview the action. Several Democrats last year proposed repealing the provision, arguing it could be used to destabilize the economy.
What the tariffs cover
The tariff order applies to most Canadian goods but excludes energy products, potash, fish and critical minerals. The new duties would also hit goods that previously avoided import taxes under the United States-Mexico-Canada Agreement, known as the USMCA. The 2020 trade pact recently expired, triggering new negotiations that could stretch through 2036.
Kentucky’s exposure
For Kentucky, the fallout extends beyond spirits if Canada launches it own retaliatory measures. According to the Canadian government, Kentucky exports about $8.4 billion in goods to Canada annually and imports about $4.9 billion from Canada annually.
The administration official said Canada was one of the few countries — aside from China — to retaliate against Trump’s earlier tariffs and must be held accountable. Trump’s proclamations cite Canada’s actions against U.S. autos and alcohol, as well as long-running disputes over dairy access.
Wildfire smoke tariffs under consideration
Trump and Canadian Prime Minister Mark Carney attended the World Cup final on Sunday, but the administration official said the event was not a working session on trade. The official added that Trump has also asked aides to examine potential additional tariffs on Canada tied to wildfire smoke that has degraded U.S. air quality.