Canada: US Alcohol Hit by Trade War as Tariffs Escalate

The ongoing trade war between the United States and Canada has reached the alcohol industry, as Canada imposes a 25% tariff on US beer, wine, and spirits in response to US tariffs of 25% tariff on imports from Canada and Mexico, along with a 10% tariff on goods from China introduced by President Donald Trump. Canada's move is part of a broader C$155 billion (USD 107 billion) retaliation package, with the first C$30 billion (USD 21 billion) taking effect immediately and the remainder in 21 days.

Already in November, it became apparent that Trump would raise tariffs in a move to protect the domestic industry. However, at that time, it was believed that the tariffs could include a 10-20% baseline (inside.beer, 06.11.2024) instead of the 25% now announced.

The new decision has an immediate impact on US alcohol exports, with provinces such as Ontario and British Columbia banning US-made alcoholic beverages. This intensifies the trade war and mirrors past tensions in the whiskey industry, which previously suffered under US-EU trade disputes from 2018 to 2023. Notably, the European Union had extended the suspension of tariffs on US whiskey until March 31, 2025, preventing a looming 50% tax on shipments to Europe (inside.beer, 20.12.2023).
 

Prime Minister Justin Trudeau has defended the measure, warning that American industries would feel the economic repercussions. He also encouraged Canadian consumers to buy local products and avoid US goods, reinforcing national support for domestic producers.
 

The US alcohol sector now faces higher costs and reduced market access in Canada, a key export destination. Bourbon, craft beer, and California wines are among the hardest hit, while Canadian authorities have hinted at further countermeasures, including potential non-tariff restrictions affecting US trade and investment in Canada.

 The escalating trade tensions risk disrupting supply chains and increasing consumer prices on both sides of the border. As economic uncertainty grows, industry stakeholders are urging both governments to seek a resolution before further damage is done to the North American beverage market.

Update: 2025-02-04
U.S. President Donald Trump has agreed to delay the implementation of 25% tariffs on Canada and Mexico for 30 days after reaching last-minute agreements with Canadian Prime Minister Justin Trudeau and Mexican President Claudia Sheinbaum. As part of the deal, Canada will enhance its border security measures, including a $1.3 billion USD initiative to combat the flow of fentanyl, while Mexico has committed to deploying 10,000 National Guard troops to its northern border in exchange for the U.S. limiting firearm exports. However, a 10% tariff on Chinese imports has taken effect, prompting China to retaliate with tariffs on various U.S. products, including coal, crude oil, and agricultural machinery. Trump has framed the tariffs as a way to strengthen the U.S. economy, while critics warn of potential price hikes and economic instability. Meanwhile, European nations are bracing for possible tariff actions, as Trump hinted at targeting the European Union next, with the UK potentially being exempt.

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