The deepening trade rift between the US and Canada has delivered a stark warning to drinks producers over what can happen when alcohol gets caught in the crossfire of international tariffs.
It has been revealed that in the first half of 2025, US-produced distilled spirits exports to Canada plunged by around 62%, falling to US$43.4m from US$114m a year earlier (Distilled Spirits Council). US wine exports fared even worse, down some 67% year on year, according to figures from Spirits Canada and US industry bodies, and reported first by the Wall Street Journal.
The collapse followed retaliatory measures imposed by Canadian provinces in response to President Trump’s new tariffs on Canadian goods. The general ad valorem tariffs were set initially at 25% from 4 March 2025, then were raised to 35% from 1 August. The levies apply to most Canadian goods and explicitly include wine, beer and spirits.
Ontario’s Liquor Control Board – historically the largest single market for US alcohol exports – effectively removed American wines and spirits from its shelves, wiping out what had been a US$700m annual market for US producers.
‘Worse than a tariff’
Back in April, the CEO of Jack Daniel’s whiskey maker Brown-Forman criticised the decision by officials in Canada to pull American-made spirits off store shelves in response to Trump’s tariffs.
“That’s worse than a tariff because it’s literally taking your sales away,” Brown-Forman CEO Lawson Whiting said. However, he noted that Canada accounts for just 1% of the company’s total sales, so the company can “withstand” the losses.
The boycott has had ripple effects across the supply chain. In the first half of 2025, California wineries lost an estimated US$173m in revenue as Canada – which previously accounted for 35% of exports – turned to domestic or other international suppliers.
“The absence of US wine from Canadian stores is not just a market disruption, it’s a breakdown in a trusted relationship built over decades,” the Wine Institute’s CEO Robert Koch told the WSJ.
Lessons for Europe
The episode comes as the US and EU work to finalise a trade agreement that would lower broad tariffs from a threatened 30% to 15%. While alcohol has so far escaped direct inclusion in the latest measures, industry groups on both sides warn that spirits, wine and beer could easily become bargaining chips if talks falter.
The EU sent around €8.9 billion worth of alcoholic beverages to the US in 2024, including €4.9 billion in wine and €2.9 billion in spirits and liqueurs. So the stakes are high. A scenario similar to Canada’s could leave flagship categories like Cognac and Champagne, and Scotch whisky in the UK, facing severe disruption. The US is the largest single export market for Scotch whisky, worth over £1bn annually.
Canadian producers did see a 14% sales lift in some provinces as consumers switched to local alternatives. But the overall effect on the spirits sector was negative, with total spirits sales in Ontario falling by 20% after US products were pulled.
