Canadian provinces' U.S. alcohol bans stall bilateral trade talks

Distilled spirits exports to Canada fell 70% year-over-year

The majority of Canadian provinces have pulled U.S.-made wine, spirits and beer from most store shelves since last year in retaliation against tariffs the Trump administration imposed on Canadian goods, and the resulting bans have become a high-profile obstacle in the bilateral trade negotiations underway before new U.S. levies take effect.

After the U.S. imposed tariffs on Canadian goods last year, Canada’s provincial leaders hit back by exercising their control over alcohol distribution and sale. The majority of provinces removed U.S. alcohol from most store shelves and stopped placing new orders, according to The Wall Street Journal.

While alcohol accounts for a small portion of the nearly $900 billion in trade between Canada and the United States, the bans have drawn particular attention from senior U.S. officials. Commerce Secretary Howard Lutnick called the bans “outrageous,” and U.S. Ambassador to Canada Pete Hoekstra said they are one reason President Trump thinks Canada is “nasty.” The White House cited the bans as one of several justifications for new 50% tariffs on Canada scheduled to be levied just after midnight.

Canadian officials are racing to negotiate an interim deal to stave off the new tariffs, which would affect about $20 billion of Canadian goods, or roughly 5% of the country’s U.S.-bound exports. They have proposed offering concessions, including pressing the provincial premiers to restore U.S. alcohol to shelves, if the new levies are dropped and existing levies on goods including steel and autos are eased.

The economic hit to the U.S. alcohol industry has been severe. The Distilled Spirits Council of the United States estimated that U.S. exports of distilled spirits to Canada fell 70% year-over-year — to $60 million for the months between March 2025, when many provinces began the bans, and December 2025, compared with $203 million during the same months of 2024. U.S. wine exports to Canada, historically the largest buyer of U.S. wine, fell 77% to $103 million in 2025 from $460 million in 2024, according to U.S. Department of Agriculture data.

The steep declines have hit individual producers hard. In a June earnings call, Lawson E. Whiting, the chief executive of Brown-Forman — the producer of brands including Jack Daniel’s whiskey — said net sales to Canada plunged 60% in 2025 and identified the U.S.-Canada trade dispute as a current headwind. At Crosby Roamann, a Napa Valley winery, 100 cases of wine sit in storage in Canada after the company had been shipping an average of 10% of production for several labels to Ontario.

“It’s an incredibly disappointing position to be in,” said Sean McBride, who co-founded the winery with his wife, Juliana. “I would encourage [Canada and the U.S.] to come back to the table and try and figure out something that doesn’t hurt small businesses like us who are really just caught in the crossfire.”

The losses have drawn bipartisan concern in the United States. “Canada’s boycott of California wine is causing devastating harm to winegrowers,” Sen. Adam Schiff (D., Calif.) wrote in a post on X last month. “I’m urging the Canadian government to recognize that California doesn’t agree with these tariff wars, to lift these restrictions and increase consumer options to strengthen both our economies.”

In Canada, public support for the bans remains high. A poll this month from Abacus Data found nearly 70% of Canadians support keeping the bans in place. “This is not simply about wine, beer or spirits,” David Coletto, the pollster’s chief executive, said in a statement. “This reflects a broader public instinct that Canada should not reward economic pressure with immediate concessions.”

Prime Minister Mark Carney has said the bans should be lifted only as part of a broader bilateral deal with the United States. Provincial leaders have resisted. “There is not a chance in hell that U.S. alcohol is going back on the shelf in British Columbia,” David Eby, the province’s premier, said last month after the U.S. threatened the new levies.

Whether Canada’s federal government can convince the provinces to put U.S. alcohol back on shelves is likely to hinge on the fine print of any agreement. Ontario Premier Doug Ford, whose province’s economy relies heavily on the auto industry, is unlikely to budge if auto tariffs are not eased significantly. A deal without lumber-sector relief could make it difficult for the premiers of British Columbia, New Brunswick and Quebec to lift their bans.

Laura Dawson, an expert on U.S.-Canada economic relations, called the alcohol bans a “double-edged sword” for Canada’s federal government. “It’s been a helpful piece of leverage for the federal negotiators to have these provincial alcohol bans as a bargaining chip,” she said. “But it’s also an uncontrolled substance because they have no guarantee that the provinces will release them unilaterally.”

Even if U.S. alcohol returns to Canadian shelves, consumer appetite may not follow. A Nanos poll this month found that nearly three-quarters of Canadians say they are unlikely to buy U.S. alcohol even if it is put back on store shelves.