As the Victoria Day long weekend approaches, a traditionally busy period for alcohol sales, Canadians find themselves in the second year without access to American liquor brands. In early 2025, Canadian liquor stores removed American products from their shelves, significantly impacting the U.S. wine industry. Recent data highlights the challenges posed by the alcohol ban as the two nations prepare for upcoming free trade discussions.
Trade figures from the U.S. Census Bureau reveal a staggering $343 million decline in wine exports from the U.S. to Canada between 2024 and 2025, marking a 77% decrease year over year. Canada, previously a major buyer of U.S. wine, implemented the ban on American alcoholic beverages in most liquor stores nationwide since March 2025 as a response to tariffs imposed by U.S. President Donald Trump. Exceptions to the ban exist in Alberta and Saskatchewan due to the privatization of liquor stores in those provinces.
The U.S. identified the alcohol prohibition as a key issue for future trade talks in a recently released report earlier this year. Other contentious topics mentioned in the report include supply management, procurement policies, and the Digital Services Tax. The report emphasized the U.S.’s concerns over the ban and urged Canada to reintroduce U.S. alcohol beverages to all provincial and territorial markets promptly and permanently.
Following Canada, China experienced the next significant drop in U.S. wine exports by $69 million, underscoring the substantial impact of Canada’s stance on the wine trade. While U.S. winemakers explored new international markets in countries like South Africa, Belgium, Japan, and the United Arab Emirates, these efforts couldn’t offset the substantial decline witnessed in other regions.
Apart from the trade disputes and tariffs, the U.S. wine industry faces challenges stemming from a global decline in demand. Factors such as the rising popularity of ready-to-drink cocktails and seltzers, changing consumer preferences, and health concerns related to alcohol consumption contribute to the industry’s struggles. Additionally, the U.S. trade surplus with Canada in wine has diminished significantly since the onset of the trade war.
Regarding spirits and beer, American liquor exports to Canada have decreased, while the country is importing more spirits, including whiskies and ready-to-drink cocktails, from Canada. Beer trade had been declining even before the trade conflicts began, with a shift towards local microbreweries and a decrease in sales of multinational beer brands. The beer industry faces challenges similar to other alcoholic beverages, compounded by steel and aluminum tariffs affecting production costs.
Despite the impact on American alcohol sales, the trade war has had repercussions for both Canada and the U.S. The LCBO in Ontario, a major alcohol purchaser, reported a significant revenue decline due to the absence of high-margin American liquor sales. However, this void has led to a surge in domestic wine sales, particularly in Ontario VQA wines.
By removing American alcohol from shelves, Canada’s actions have affected various states in the U.S., impacting California’s wine industry and bourbon and whisky exports from Tennessee and Kentucky. As the U.S. navigates a critical midterm election cycle, the future of the Canada-U.S.-Mexico Agreement on trade remains uncertain, with a review scheduled for this year.
The agreement stipulates a July 1 deadline for all three North American countries to renew the existing pact or signal their intent to exit. Nevertheless, Canada’s chief trade negotiator has emphasized that the date should be viewed as a checkpoint rather than a strict deadline.
