US alcohol exports to Canada fell 81% after provincial bans. Now new 50% US tariffs hit Canadian whisky makers like Crown Royal. Both sides say they're losing.
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The US-Canada trade war over alcohol escalated Saturday with a new 50% tariff on Canadian spirits and wine. The move followed a breakdown in talks, and came 18 months after Canadian provinces began pulling American alcohol from shelves.
The booze battle started last year after President Donald Trump imposed broad 25% tariffs on Canadian goods. Canada responded with its own 25% retaliatory tariffs targeting alcohol. The country's provinces went further, banning American alcohol from government-controlled shelves and halting new purchases or distribution.
Alcohol accounts for a tiny fraction of the hundreds of billions of dollars in annual US-Canada trade. The impact on the industry has been unusually severe, partly because of outright bans and because alcohol is often prized for its country of origin. Canadian whisky cannot be made in the US.
Canadian provinces enacted bans around March 2025, the same month Canada levied its tariffs. While those federal tariffs were lifted in September 2025, most province-level bans stayed in place. Eight of ten provinces still have some restrictions. Alberta and Saskatchewan are the exceptions.
US alcohol imports to Canada fell 81%, from roughly $718 million to $137 million, during the 12 months through February 2026, compared with the prior year, according to the White House. Total US exports to Canada dropped 4.8% in calendar 2025.
American makers felt singled out. Lawson Whiting, CEO of Brown-Forman (BF.B), said last year the bans were a "disproportionate" response. On an earnings call in June, the company said its organic sales in Canada fell nearly 60% in its 2026 fiscal year, with products still off shelves in most provinces.
Canadian producers are far more dependent on the US market than their American counterparts are on Canada. Before the bans, Canada accounted for about 10% of US spirits exports. But 93% of all Canadian spirits exports by value went to the US, according to Spirits Canada. Nearly 50% of all spirits made in Canada are tied to US demand.
The new tariffs apply to spirits and wine. Popular Canadian whisky brands like Crown Royal, Canadian Club, and Fireball, the latter made in America with imported Canadian whisky, could be affected.
"Both the Canadian and American spirits industries have felt significant impacts of this broader trade dispute," Cal Bricker, President and CEO of Spirits Canada, said in a statement in July.
The bans on US alcohol did not boost Canadian sales. Overall spirits sales in Canada fell about 4.4% by volume after the bans, according to Spirits Canada. Sales of Canadian-made spirits were essentially flat.
Prime Mister Mark Carney asked provinces to return US alcohol to shelves last week as the countries neared a deal. Offiials in Nova Scotia and Newfoundland signaled they would lift bans if a broader agreement was reached. Newfoundland said Thursday it would resume ordering American products, then reversed course after the trade talks failed.
Canadian makers have warned provincial governments that the policy intended to punish America is now endangering them.
Trade associations on both sides are pushing for the same goal: end the mini trade war over alcohol.
"We like to compete by sip and taste," Swonger said. "Not by trade barriers."
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