As we approach the Victoria Day long weekend, known for high alcohol sales, Canadians are facing the second year without access to American liquor brands. The decision to remove American products from Canadian liquor store shelves in early 2025 dealt a significant blow to the U.S. wine industry. Trade data from the U.S. Census Bureau indicates a staggering $343 million US decline in wine exports to Canada from 2024 to 2025, marking a 77% drop year-over-year.
Since March 2025, American alcoholic beverages have been absent from most liquor stores nationwide in response to tariffs imposed by U.S. President Donald Trump. Exceptions exist in Alberta and Saskatchewan, where limited sales have resumed due to liquor store privatization in those provinces. A recently published report highlighted the alcohol ban as a key issue for upcoming trade discussions between the U.S. and Canada, along with other concerns like supply management and digital services tax.
The U.S. has expressed concerns regarding the continued absence of American alcohol products in Canadian markets, urging Canada to allow their return. Following Canada, China experienced the next significant drop in U.S. wine exports by $69 million US, demonstrating Canada’s substantial impact on the wine trade. Despite this, U.S. winemakers found alternative markets in countries like South Africa, Belgium, Japan, and the United Arab Emirates, though these increases did not offset the losses elsewhere.
Apart from trade conflicts, the U.S. wine industry is grappling with a global demand slump and increased competition from ready-to-drink cocktails and seltzers. These challenges, along with changing consumer preferences and health concerns related to alcohol consumption, have led to a decline in wine sales. The U.S. trade surplus with Canada has diminished since the trade war’s onset, while Canadian wine exports to the U.S. have remained stable and even grown since 2020.
In contrast to declining wine exports, American liquor exports to Canada have decreased, while the import of Canadian spirits, including whiskies and ready-to-drink cocktails, has surged. Beer trade had been declining even before the trade war, compounded by the rise of microbreweries and changing consumer preferences. The ongoing steel and aluminum tariffs have further impacted beer production costs.
Although the alcohol ban serves as a bargaining tool in trade negotiations, Canada is not immune to the trade war’s effects. The LCBO in Ontario reported a significant revenue decline due to the loss of high-margin American liquor sales. However, this void has boosted domestic wine sales, particularly in Ontario VQA wines. The ban has affected various U.S. states’ alcohol industries and is coinciding with a crucial midterm election cycle in the U.S.
The Canada-U.S.-Mexico Agreement (CUSMA) is set for review, with a deadline of July 1 for approval or an exit signal from all three countries. Canada’s chief trade negotiator emphasized that this date is more of a checkpoint than a strict deadline, as discussions continue regarding the agreement’s renewal.