Canadian spirits ‘uniquely vulnerable’ to US tariff
Trade body Spirits Canada is urging its provincial governments to work with the US to prevent 50% tariffs on Canadian alcohol, warning that the industry faces cancelled orders and inventory challenges.
Yesterday (21 July), US president Donald Trump slapped a 50% tariff on certain Canadian goods in retaliation for the nation’s “unequal treatment” of US alcohol. The duty is set to come into force on 19 August, following Canada’s nearly 18-month removal of American alcohol from shelves.
All but two Canadian provinces responded to Trump’s initial tariffs by removing US-made alcohol from their government-controlled liquor stores in March 2025.
Subsequently, exports of American spirits to Canada plunged by 70% in a year, with a US trade representative launching a bill to investigate the ‘discriminatory’ boycott on 9 July.
The new US tariff will be applied to most alcohol categories in Canada, including beer, wine, cider and spirits.
Trade body Spirits Canada points out that the tariffs will impact all spirits, including spirits-based ready-to-drink (RTD) products.
The industry group said the tariff puts one of the nation’s “most successful export sectors at significant risk and underscores the urgent need for a coordinated, negotiated solution between both countries”.
Spirits have been exempt from tariffs for nearly four decades under the Canada-US free trade deal (formerly Nafta) and subsequently under the US-Mexico-Canada agreement (USMCA). The USMCA is currently under negotiation as part of a six-year review.
“Both the Canadian and American spirits industries have felt significant impacts of this broader trade dispute,” said Cal Bricker, president and CEO of Spirits Canada.
“While we are disappointed by this announcement, we remain committed to working collaboratively with governments on both sides of the border to reach a practical solution before these tariffs take effect.
“The long-standing trade relationship between Canada and the United States has benefited producers, consumers, workers and governments alike, and we believe that relationship is worth protecting.”
The trade group warns that Canada’s spirits sector is “uniquely vulnerable” to the consequences of the tariffs, with nearly 50% of the nation’s spirits production destined for the US.
In 2025, approximately 93% of Canada’s total spirits exports went to the US, while 48% of spirits production in Canada is tied to US demand, which would leave “limited alternatives of replacing that demand in the near term”, according to Spirits Canada.
“The North American spirits sector is deeply interconnected,” added Bricker. “Tariffs do not simply affect exporters – they impact farmers, manufacturers, hospitality businesses, retailers, governments and ultimately consumers in both countries.
“We are concerned that this action could trigger a cycle of retaliatory measures that harms an industry that has prospered under decades of fair and reciprocal trade.”
Furthermore, data from Spirits Canada showed total sales of Canadian spirits fell by approximately 4.4% by volume and by 4.2% in value, following the delisting of US spirits last March.
Protect exports and jobs
Spirits Canada is calling on federal and provincial governments to work together to stop the tariffs going ahead next month.
“We urge all parties to return to the negotiating table as quickly as possible,” Bricker warned. “By working collaboratively and constructively, we are confident that a solution can be found that restores certainty, protects Canadian jobs and preserves one of North America’s strongest trading relationships.”
The trade group is also asking governments to “restore reciprocal market access for US alcohol through provincial distribution systems” to protect Canadian exports, jobs and investment, and “avoid further escalation” through countermeasures on the industry.
Spirits Canada is also calling for a “coordinated federal-provincial strategy that recognises the national economic consequences of provincial policy decisions” and for support for Canadian distilleries as they face “cancelled orders, production disruptions, inventory challenges and reduced access” to the US.
Earlier this week, nine Canadian provinces signed an agreement to allow direct-to-consumer alcohol sales, nearly two months after the initial deadline.
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