It’s almost ‘liberation day.’ How Trump’s latest tariffs could hit national, Spokane businesses

Wednesday is expected to mark what President Donald Trump last week called “liberation day,” referring to a new round of tariffs set to start on about 90% of the $3.3 trillion in merchandise that the United States imported in 2024.

In a recent interview with Fox News, Treasury Secretary Scott Bessent said 15% of U.S. trading partners, which he labeled the “Dirty 15,” impose high tariffs on foreign goods, including those from the U.S. These countries are expected to be the focus of the tariffs that start Tuesday.

Among the trading partners being evaluated by Trump administration officials are those with the most imbalanced U.S. trade, including Brazil, Canada, China, the European Union, India, Indonesia, Japan, Malaysia, Mexico, South Africa, South Korea, Switzerland, Taiwan, Thailand, Turkey and Vietnam, according to a Federal Register notice from the Office of the U.S. Trade Representative last month.

The nations that Trump is expected to target with new tariffs next week share one thing in common: They all sell more goods to the United States than they buy from it.

The tariff rollout, if it takes place as announced, comes amid already strained relations with the U.S.’s two closest trading partners, Canada and Mexico, and has led to Canadian retailers pulling U.S.-made spirits from their shelves.

While Dry Fly Distilling, based in Spokane, didn’t have products pulled, it had mostly worked its way through the process to expand its footprint into Canada just before the markets there disappeared, said Patrick Donovan, a minority owner and president of Dry Fly.

“We had some opportunity to maybe sell some product in Canada,” Donovan told The Spokesman-Review. “It won’t be a consideration, at this point.

“But if I had to distill it down, no pun intended, the biggest point is just really the volatility. No one knows what’s going to happen.”

Huge companies like Anheuser-Busch InBev, based in Leuven, Belgium, have the ability to absorb changes in the market. However, small companies like Dry Fly face different challenges.

“One thing about being a small business is we can be slightly more flexible,” Donovan said. “But you don’t have the resources to absorb the cost increases the same way.”

As of yet, the company, which imports both cans for its cocktail drinks and glass from overseas to bottle its spirits, has not raised its prices of the beverages that it distributes to 30 states.

“I don’t know that we have that power, to be honest,” he said. “I think where we are right now, we are trying to get some clarity as to what the future is going to look like. I think everybody in our industry would kind of say the same thing.”

Canada dry

Thomas Bard expected a big boost this year, when stores in Saskatchewan and Ontario planned to start selling his distillery’s bourbon. Instead, Canadian provinces yanked U.S. alcohol from their shelves – pitching Bard’s small Kentucky company into the center of a nascent trade war.

“It’s a huge deal when you get a new customer base,” Bard told the Washington Post. “So for this to be, just be taken away from us. … That’s an absolute punch to the gut.”

Alcoholic drinks have become the subject of dueling tariff threats between the United States and its neighbors. But some craft liquor distillers such as Bard say they are particularly hard hit because they see other countries as better targets for growth than parts of the highly regulated and crowded U.S. market.

“It’s easier to get into Canada than it is to get into some other states here,” said Bard, whose distillery has been selling its whiskey in Alberta and British Columbia for two years.

Canada enacted a 25% tariff on U.S. products including spirits and beer in early March in retaliation for levies imposed on Canadian goods by Trump. The European Union recently threatened to place a 50% tax on U.S. whiskey, although it delayed those duties for several weeks. Trump said the United States would in turn tax EU alcohol at 200%.

“We’re basically going to have to go back and start from scratch,” Bard said.

Only a small percentage of U.S. craft distillers sell their products in other countries, but more than half of those exporters ship to Canada, according to the American Craft Spirits Association.

Canada also accounts for nearly 40% of American craft beer exports, according to the Brewers Association. It’s also the largest export market for U.S. wines, according to the Wine Institute.

While provincial governments issue liquor licenses in Canada, permitting rules in the United States vary between states and at the municipal level. Some areas levy steep taxes on alcohol sales, and a post-Prohibition-era ban on alcohol producers owning bars requires domestic distillers to find distributors and retailers willing to sell their products nationwide.

“There’s probably 40-plus licenses they need to get,” said Kevin Anderson, an alcohol industry consultant and former alcoholic beverage regulator.

Bard, for example, works with one Canadian importer and distributor who helps him sell his whiskey across western Canada. In the United States, he would probably have to find an individual distributor for each state, he said.

Likening U.S. states to “50 little countries,” Bard said: “Every one of them is different and hard to get into.”

Most U.S. states have a three-tier alcohol distribution system, where wholesalers connect alcohol producers to retailers. Proponents say it prevents alcohol producers from monopolizing the market and stops stores from selling only their own products.

The system also helps restrict underage sales, raises public revenue and stops counterfeit products, advocates say.

“It is the gold standard for competition for choice,” said Michael Bilello, with the Wine and Spirits Wholesalers of America.

But critics say the system benefits big companies that offer distributors the most bang for their buck. Liquor and wine stores struggle to distinguish themselves from each other “because they’re all buying from the same wholesalers,” said Tom Wark, executive director of the National Association of Wine Retailers.

The number of distributors has consolidated over time, making it difficult for small producers “to even get on the truck,” said Dan Croxall, an expert in craft beer law at the University of the Pacific.

Bilello said that consolidation, which has happened across the industry, has allowed distributors to have better technology and service, and that wholesalers have invested heavily in distributing and marketing craft brands.

Some small alcohol brands hope to make up lost revenue by redoubling their efforts in the United States, but they’ll face obstacles that were already confronting the alcohol industry before the threat of a trade war.

Consumers have cut back on discretionary spending as inflation drives up prices. Younger generations are drinking less amid broader wellness and sobriety movements, and as mocktails and cannabis products have grown in popularity, industry observers said.

Beyond duties specifically on alcohol, distillers and craft brewers could feel the pain of a trade war in other ways. Recently imposed tariffs on products from China, as well as duties on steel and aluminum, are expected to drive up costs for cans, glass and corks used for packaging. About 75 % of packaged craft beer today is packaged in cans, Croxall said.

“The tariffs are just another ‘Oh, my God, is this just another thing that’s going to push us towards closure?’ ” he said. “It’s not a great environment right now.”

It’s unclear how this year’s tariffs will affect the industry’s bottom line or if that could translate to higher prices for consumers.

Sales fell 20% when the EU levied a 25% tax on U.S. whiskey from 2018 -22, according to the Distilled Spirits Council of the United States. The retaliatory U.S. tariff on some European alcohol led to a decline of more than 30% in U.S. imports of Scotch whisky.

The United States has never enacted tariffs as high as 200% on alcohol, but another country’s experience shows how import levies can damage the industry. Australia’s wine exports to China were “pretty much killed” when the Chinese government levied tariffs as high as 218% from 2021 to 2024, said Marten Lodewijks, president of IWSR Americas, a global drinks data and analytics company.

Some alcohol companies have already felt a hit.

Texas-based customs broker J.D. Gonzalez said one of his clients balked when faced with $9,000 in tariffs to transport 20,000 pounds of tequila from Mexico to the United States in early March. The client was unlucky: The United States enacted 25 % tariffs on Canadian and Mexican goods on March 4 but paused most of the duties days later.

Todd Ramsay, Bard’s Alberta-based importer and distributor, said he has been crushed by the trade war, as nearly 90% of his inventory comes from the United States. Roughly $200,000 worth of his imported American alcohol was sitting in an Alberta warehouse when he learned the province had restricted the sale of U.S. liquor, leaving that inventory unable to be sold, transferred or returned.

Alastair Brogan’s craft-whiskey distillery in Colorado typically gets 5% of its revenue from Canadian sales. Brogan no longer expects that this year, but he considers the bigger hit to be the loss of goodwill toward American whiskey and the brand he built.

“All the energy, resources that American distilleries have put into being in Canada has just been wiped out,” he said.

Reporting from The Spokesman-Review’s Thomas Clouse and The Washington Post.