As the Victoria Day long weekend approaches, known for high alcohol sales, Canadians are entering the second year without access to American liquor. In early 2025, Canadian liquor stores removed American products from their shelves, significantly impacting the U.S. wine industry. Trade data from the U.S. Census Bureau reveals a staggering $343 million US decline in wine exports to Canada between 2024 and 2025, representing a 77% year-over-year decrease.
Since March 2025, American alcoholic beverages have been absent from most liquor stores nationwide in response to President Donald Trump’s tariffs. Exceptions exist in Alberta and Saskatchewan, where limited sales have resumed due to privatized liquor stores. A recent report highlighted the alcohol ban as a key issue for upcoming trade talks between the U.S. and Canada, alongside supply management, procurement policies, and the Digital Services Tax.
The U.S. has raised concerns about the ban and urged Canada to allow the immediate return of U.S. alcohol beverages to all provincial and territorial markets. Apart from Canada, the most significant drop in U.S. wine exports was to China, emphasizing the substantial impact of Canada’s actions on the wine trade. While U.S. winemakers found alternate markets in countries like South Africa, Belgium, Japan, and the United Arab Emirates, these increases were insufficient to offset the decline in other regions.
Before the trade dispute, American wine exports were already decreasing globally, excluding Canada, with an 18% drop between 2022 and 2023. Beyond tariffs and trade tensions, U.S. wineries face challenges from a shrinking market due to changing consumer preferences, competition from ready-to-drink cocktails, and health concerns related to alcohol consumption.
Regarding spirits and beer, American liquor exports to Canada have declined, while imports of Canadian spirits, including whiskies and ready-to-drink cocktails, have surged. Beer trade had been declining even before the trade war, with a rise in microbreweries and a shift towards local beer brands. Steel and aluminum tariffs have also added to production costs for the beer industry.
Although the booze ban serves as a bargaining tool, Canada has not escaped unscathed from the trade war. The LCBO in Ontario reported a revenue decline, partly due to lost American liquor sales. However, this vacuum has led to a surge in domestic wine sales, particularly Ontario VQA wines. The ban has adversely affected American wine producers, particularly in California, and impacted bourbon and whisky exports from Tennessee and Kentucky.
As the U.S. midterm election cycle approaches, the trade situation remains crucial. The Canada-U.S.-Mexico Agreement (CUSMA) is up for review, with a deadline of July 1 for all three countries to approve a renewal or indicate their intent to exit the pact. Canada’s chief trade negotiator views this date as a checkpoint rather than a strict deadline.
