The ongoing trade dispute between the United States and Canada is continuing to heat up, and wine and spirits consumers and producers are increasingly paying the price.
Talks between U.S. and Canadian trade representatives broke down shortly before midnight Aug. 22, after weeks of negotiations attempting to find a deal that would keep President Donald Trump from imposing 50% tariffs on $20 billion worth of Canadian goods, or about 5% of its U.S.-bound exports. Those tariffs, which cover a wide variety of goods, including lumber and Canadian wines and whiskeys, went into effect at midnight.
A Costly Fight (for Wine)
The U.S. had already imposed tariffs on a variety of Canadian products last year, including steel, aluminum, lumber and automobiles. In response, governments in eight of Canada’s ten provinces have ordered American wines and spirits removed from stores and restaurants. Canada is American wine’s biggest export market, and the wine bans have cost California wineries close to $1 billion per year. Now, American consumers will face 50% tariffs on wines from Niagara and the Okanagan, as well as Crown Royal and Fireball whiskey, which have a U.S. retail value of $2.4 billion and $1.45 billion respectively, according to Impact Databank, a sister publication of Wine Spectator.
At one point during last week’s negotiations, Canadian prime minister Mark Carney had asked those provincial leaders to consider lifting the bans on American beverages if the deal was sealed. Now the bans are expected to continue.
Carney struck a defiant note, blaming an ever evolving set of demands from U.S. officials. Several media reports said that U.S. Commerce Secretary Howard Lutnick disagreed with some provisions on metals and autos that U.S. Trade Representative Jamison Greer had agreed to during negotiations, though a White House spokesperson denied those reports and insisted the Canadians had increased their demands. The Canadians also said that one last minute U.S. demand was an end to a law requiring products sold in Quebec to include a French translation, which U.S. officials have called an unfair trade barrier.
“Last spring, I warned that America is trying to break us so they can own us and I promised that that will never, ever happen,” Carney said at an hourlong news conference Aug. 22 in Ottawa. “We are keeping that promise. Canada is becoming stronger and less dependent on America.”
Members of the wine and spirits industry were unhappy with the latest setback. “We recognize the Trump administration’s efforts to encourage the Canadian provinces to return American spirits and wine products to store shelves,” said the Toasts Not Tariffs trade coalition in a statement. “However, a 50% tariff on Canadian spirits, wine, and glass bottles will also have consequences for U.S. hospitality businesses. Bars, restaurants, and hotels across the country rely on a wide range of spirits and wine products to meet consumer demand, and higher costs will place additional pressure on these businesses already navigating a challenging economic environment.”
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