Why Trade Retaliation Lists Always Include Bourbon

Kentucky's whiskey makers have now taken shrapnel in three separate trade wars they had no part in starting, and Wisconsin's motorcycle plant isn't far behind. That isn't bad luck. It's the point.

When Canada's dollar-for-dollar retaliation against the United States takes effect on Sept. 8, the list will run through steel, dairy, appliances, agricultural equipment, pulp and paper, and electronics — sectors Prime Minister Mark Carney named directly after trade talks collapsed on Aug. 22, hours before Washington's own 50% tariffs on roughly $20 billion of Canadian goods kicked in at midnight. "You're at war when you get attacked. We got attacked," Carney told reporters the next morning.

Statement by Mark Carney on Canada-U.S. trade negotiations

Trade retaliation lists look chaotic from the outside — cement here, hockey sticks there, honey and jewelry mixed in with heavy industry. They aren't. Every government that has built one in the past decade has followed roughly the same playbook: hit products with real economic weight, then aim a chunk of them at the industries and states that can make the other side's politicians feel it fastest.

How do countries decide which products to tariff?

The clearest case study sits in 2018. When the European Union retaliated against Trump-era steel and aluminum tariffs, it built a list covering $3.2 billion of US goods, and steel and aluminum accounted for only 33% of it, according to a Peterson Institute for International Economics analysis. The rest was agricultural and consumer goods chosen for where they're made, not just what they're worth: bourbon and whiskey ($645 million), cosmetics ($384 million), motorcycles ($192 million). Bourbon is distilled almost entirely in Kentucky, Senate Majority Leader Mitch McConnell's home state. Harley-Davidson builds in Wisconsin, then-House Speaker Paul Ryan's turf. The EU's 31% tariff added an estimated $2,200 to the cost of a US-made Harley sold in Europe — a number designed to be felt in a specific congressional district, not just on a balance sheet.

Canada has run the same play against its own southern neighbor. When British Columbia Premier David Eby ordered the province's liquor board to pull American products during an earlier round of this fight, he didn't ban all US alcohol — he targeted what he called "top-selling 'red-state' brands" specifically. President Trump's 25% tariffs are a complete betrayal of the historic bond between our countries and a declaration of economic war against a trusted ally, Eby said at the time. Then-Prime Minister Justin Trudeau urged Canadians to start "opting for Canadian rye over Kentucky bourbon" — again, Kentucky, again, bourbon.

This time the targeting is broader and more industrial than symbolic six-packs of red-state beer. Carney's list of steel, dairy, appliances, agricultural equipment, pulp and paper and electronics reads like an inventory of Midwestern and Rust Belt manufacturing and farm-belt exports — the same regions that decided the last two presidential elections. Canada sent 72% of its total goods exports to the US last year, so Ottawa has enormous leverage to spread around; the choice of exactly where to spend it is the strategy.

Who actually pays for a tariff?

Not the exporting country, at least not directly. A tariff is collected from the importer — the US company bringing Canadian steel or cheese across the border pays US Customs and Border Protection, which issued a bulletin to businesses on Aug. 22 confirming officers would enforce the new 50% rate immediately. Importers then generally pass some or all of that cost forward, to wholesalers, retailers and eventually shoppers. That's the mechanism that makes politically targeted tariffs work as leverage: the pain shows up as a price increase or a lost export contract in a specific place, which is far more persuasive to a senator than an abstract trade deficit number ever is.

There's also a legal quirk in how Washington got here this round. Trump imposed the new 50% rate under Section 338 of the Tariff Act of 1930 — a Depression-era, Smoot-Hawley-adjacent provision that lets a president levy up to 50% on imports from a country found to discriminate against US commerce. It requires no investigation and carries no time limit, and per PBS/AP reporting, it had never actually been used to raise tariffs before this year. Because there's no precedent, trade lawyers say the door is open to legal challenges that simply don't exist for more established tariff authorities.

Carney has said Canada would still drop its retaliatory tariffs on steel, aluminum and autos if Washington lowered its own — he's on record blaming "last-minute changes" to the US terms for blowing up the deal, not any Canadian appetite for an open-ended fight. US Trade Representative Jamieson Greer has offered the opposite account, saying Canada "declined to finalize" an agreement that would have cut US tariffs on steel, aluminum, autos and lumber in exchange for cooperation on critical minerals and forced-labor enforcement. Both sides agree on one thing: nothing further is scheduled before the Sept. 8 deadline arrives.

The 2018 EU list expired on schedule in 2021, once the underlying steel and aluminum dispute cooled. Whether this one runs that same course — or gets folded into a renegotiated USMCA, which is now an open question in its own right — depends less on economics than on how much a targeted senator's phone starts ringing between now and Labour Day.

Similar mechanics are already reshaping other corners of US trade policy: Daybreak Wire recently broke down how Washington drew the line between a straightforward tariff and a price floor in its new solar rule, a distinction that determines who actually eats the cost.