The bourbon industry in Kentucky is feeling the burn following President Trump’s 25 percent tariffs on Canada and Mexico, a move ostensibly aimed at curbing fentanyl trafficking. Canada didn’t take it lightly and has hit back with its own retaliatory measures that are shaking the bourbon world.

Canadian provinces have gone full throttle, pulling American bourbons off their shelves — a move that the Kentucky Distillers’ Association said will hurt the state’s $9 billion signature industry.

“Unfortunately, the return of retaliatory tariffs on American whiskey will have far-reaching consequences across Kentucky, home to 95% of the world’s bourbon. That means hard-working Americans — corn farmers, truckers, distillery workers, barrel makers, bartenders, servers, and the communities and businesses built around Kentucky — will suffer,” the president of the distillers’ association, Eric Gregory, said in a statement.

“Retaliatory measures against bourbon harm these markets and jeopardize growth for years to come, including the unjust and disproportionate removal of American spirits from retail shelves and prohibition on new purchases of alcohol from American companies,” he said.

Layoffs have already hit Kentucky distilleries, which some distillers blame on the market cooling. Campari Group, an Italian company that owns the Wild Turkey distillery, announced last month that the company is looking to cut 10 percent of its workforce, or around 500 jobs. In January, Brown-Forman, the parent of Jack Daniel’s and Woodford Reserve, announced plans to lay off hundreds of employees and close its Louisville facility.

Kentucky distillers support more than 23,000 jobs and $2.2 billion in salaries, Mr. Gregory said. Now there are fears that the tariffs will cause even more layoffs.

While Canada’s retaliation began hitting large U.S. distillers first, the fallout is now spreading to smaller bourbon makers. The chief executive of Brough Brothers Bourbon, Victor Yarbrough, said the company’s Canadian export plans were derailed overnight. “We were literally in the middle of closing a deal when everything came to a screeching halt. Now, we’ve had to pause our momentum,” Mr. Yarbrough said, according to WDRB, a Louisville TV station.

Only it might not be all bad news. Canadian spirits like Crown Royal — worth $2 billion in annual U.S. sales — now face their own tariff woes south of the border. American whiskey aficionados may soon turn to homegrown brands, providing a glimmer of hope for smaller Kentucky distilleries.

Jack Daniel’s CEO Lawson Whiting said Canadian stores pulling American liquor from their shelves entirely was a “disproportionate response,” but emphasized that Canada accounts for just 1 percent of their total sales. “If this spreads to larger markets like Mexico, which represents 7 percent of our sales, we might have a bigger problem,” Mr. Whiting said, according to the Globe and Mail.

In India, tariffs on American spirits were once at a wallet-busting 150 percent, but they have been trimmed to 100 percent. That opens up huge potential in the world’s largest whiskey market, with hopes that further negotiations could slash the duty even more.