After US President Donald Trump officially imposed 25 per cent tariffs on all goods from Canada and Mexico, along with 10 per cent tariffs on goods from China, the response from these countries was swift. Among the hardest-hit industries is US alcohol, with Canada leading the charge in retaliation.
The White House cited an “extraordinary threat posed by illegal aliens and drugs” as the reason behind these tariffs, framing it as part of a national emergency. However, the economic consequences have quickly rippled beyond that narrative, landing squarely on the shelves of liquor stores across North America.
US wine and spirits producers are no strangers to the fallout from trade wars. Between 2018 and 2023, similar tariffs affected exports significantly, with US whiskey producers losing key markets in the European Union. Importers, distributors, and ultimately consumers all felt the financial pinch.
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Now, as this new trade conflict unfolds, the stakes are even higher. Here’s what we know so far.
Canada’s retaliatory tariffs
On February 1, Canadian Prime Minister Justin Trudeau announced a bold response: a 25 per cent tariff on $155 billion worth of American goods. Alcohol was the first industry named.
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“Like the American tariffs, our response will also be far-reaching and include everyday items such as American beer, wine, and bourbon,” Trudeau said during a press conference.
However, these tariffs will be implemented in phases:
- February 4: $30 billion worth of goods targeted
- 21 days later: Additional tariffs on $125 billion worth of goods
Mexico joins the trade war
Mexican President Claudia Sheinbaum has also instructed her economy minister to impose tariffs on US products. While specific goods haven’t been named yet, it’s clear that Mexico intends to support Canada’s stance.
Canadian provinces take their own measures
Beyond federal actions, Canadian provinces are adding pressure:
- British Columbia: Premier David Eby announced an immediate boycott of American alcohol from Republican states in government-run BC Liquor Stores. “Liquor store employees will be removing the most popular of these brands from government store shelves,” Eby stated.
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- Ontario: Premier Doug Ford followed suit, directing the LCBO (Liquor Control Board of Ontario) to stop selling American alcohol. “Starting Tuesday, we’re removing American products from LCBO shelves,” Ford said.
Alcohol industry responds
Chris Swonger, president and CEO of the Distilled Spirits Council of the United States (DISCUS), strongly criticised these retaliatory measures. “This aggressive retaliation targeting American spirits is extremely disappointing and counterproductive,” Swonger was quoted as saying by Bloomberg.
“Taking American spirits off the store shelves will needlessly reduce revenues for the provinces and hurt Canadian consumers and hospitality businesses," he said.
In 2023, the US exported $255 million worth of spirits to Canada and imported $537 million worth of Canadian spirits. The industry fears that this cycle of tariffs could cause long-term damage.
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A joint statement from DISCUS, the Chamber of the Tequila Industry, and Spirits Canada expressed deep concern. “We are deeply concerned that US tariffs on imported spirits from Canada and Mexico will significantly harm all three countries,” the statement read.
Trump stands firm
Despite the backlash, Trump remains unapologetic. On Truth Social, he acknowledged the potential for economic strain, stating: “Will there be some pain? Yes, maybe (and maybe not!). But we will make America great again, and it will all be worth the price that must be paid.”
[With agency inputs]
