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- The US-Canada trade war escalated on Saturday with new 50% tariffs on Canadian alcohol.
- American booze was pulled from Canadian shelves last year and remains restricted in most of Canada.
- Alcohol makers in the US and Canada say both industries are hurting.
What started as an eye-catching retaliation tactic to tariffs has become a sticking point in the US-Canada trade war — and neither side is standing down.
The booze battle began last year after President Donald Trump imposed broad 25% tariffs on Canadian goods. Canada responded with its own 25% retaliatory tariffs targeting alcohol, among other products. The country's provinces went further, pulling American alcohol from shelves and halting new purchases or distribution.
A year and a half later, American alcohol remains shut out of much of Canada. The boycott was so effective that Trump cited it as a driving force for his latest tariffs, including a 50% tariff on alcohol from Canada that took effect on Saturday after talks between the two countries broke down.
While there's been plenty of finger-pointing about who started what, alcohol industries on both sides of the border say they're losing.
"Our industry is really just an unfortunate victim," Chris Swonger, CEO of the Distilled Spirits Council of the United States, said. "It's been devastating for the US industry over the last year and a half, and it's going to be significantly devastating for the Canadian spirits industry, but it'll trickle down and have an effect all the way from bartenders to our distributor partners to retailers to the American hospitality economy."
Alcohol represents just a tiny sliver of the hundreds of billions of dollars in goods traded between the US and Canada, but the impact of the trade war on the industry has been especially severe and visible, in part due to the outright bans as well as the direct impact on beloved alcohol brands.
For alcohol makers, the industry is also an unusual target for a trade war that's partially aimed at shifting manufacturing back to the US. Unlike other goods, alcohol is often prized specifically because of its country of origin. You can't make Canadian whisky in the US.
"An American consumer may love Canadian whisky, and someone else may love tequila," Swonger said.
The US and Canadian industries are calling for an end to the alcohol bans and tariffs
Canadian provinces, which control alcohol imports, enacted bans on American alcohol around March 2025, the same month Canada levied its retaliatory tariffs. While those tariffs were lifted in September 2025, most of the province-level bans remained in place.
Some provinces started allowing existing American stock to be sold, but continued to ban new imports. Eight out of 10 provinces still have some restrictions in place, with Alberta and Saskatchewan as the exceptions.
The bans turned out to be one of the more headline-grabbing results of the trade war. They were also effective at inflicting economic pain: Imports of US alcohol to Canada fell by 81%, from about $718 million to $137 million, from March 2025 through February 2026, compared with the preceding year, according to the White House. In comparison, total US exports to Canada fell 4.8% in 2025.
American alcohol makers felt they were being unfairly targeted. Lawson Whiting, CEO of Brown-Forman, the parent company of Jack Daniel's, said last year the bans were a "disproportionate" response to the tariffs. On an earnings call in June, the company said its organic sales in Canada fell nearly 60% in its 2026 fiscal year, as its products remained off shelves in most Canadian provinces.
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Now, Canadian makers, which are far more dependent on the US market than their American counterparts are on the Canadian market, face Trump's new 50% tariffs, which he said were a direct response to "Canadian discrimination" against American-made booze.
The tariffs impact spirits, wine, and beer, with the most popular Canadian booze export to the US being Canadian whisky. Popular brands like Crown Royal, Canadian Club, and Fireball — the latter of which is made in America with imported Canadian whisky — could be affected.
"Both the Canadian and American spirits industries have felt significant impacts of this broader trade dispute," Cal Bricker, President and CEO of Spirits Canada, said in a statement in July.
Canadian spirit makers rely more heavily on exports to the US than American makers do on exports to Canada. Before the bans, Canada accounted for about 10% of US spirits exports. But 93% of all of Canada's spirits exports by value went to the US, according to Spirits Canada. Of all the spirits produced in Canada, nearly 50% are tied to US demand, the group says.
The bans on American alcohol didn't necessarily translate to an increase in sales for Canadian makers, either. Following the bans, overall spirits sales in Canada fell about 4.4% by volume, while sales volumes of Canadian-made spirits were essentially flat, according to Spirits Canada.
The alcohol bans were a key part of the failed negotiations
The provincial bans became a major talking point last week as Canadian and US officials sought to make a deal to avoid new tariffs.
Swonger said the alcohol industry feels it has unfairly become a "leverage point in broader trade negotiations." He said that while distillers appreciated Trump's efforts to prioritize the US alcohol industry going into negotiations, they also wanted to avoid the new 50% tariffs and get the bans lifted instead.
Prime Minister Mark Carney asked Canadian provinces to return US alcohol to their shelves last week as the countries closed in on a deal. Officials in two provinces, Nova Scotia and Newfoundland, signaled they were ready to lift bans on American alcohol if a broader deal was reached.
Newfoundland said Thursday it would resume ordering American products, but changed course days later after the trade talks failed.
Canadian makers have also been telling the Canadian provincial governments that the policy intended to punish America is endangering them as well.
"While intended as a response to broader trade tensions, those measures have now become the stated basis for direct US retaliation against Canadian spirits exports," Spirits Canada said in July, encouraging the federal and provincial governments to work together to avoid US retaliation.
Now, trade associations in Canada and the US are pushing for the same goal: end the mini trade war over alcohol.
"We like to compete by sip and taste," Swonger said. "Not by trade barriers."
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