As the United States and Canada continued last-minute talks a day before up to a 50% new tariff on Canadian products in the United States takes effect, Canada's ban on U.S. alcoholic beverages has emerged as a key sticking point in the negotiations.
On the 18th, local time, according to Reuters and others, the Canadian prime minister's office said Prime Minister Mark Carney spoke with U.S. President Donald Trump in the afternoon and discussed major issues including the economy, the situation in the Middle East, and bilateral trade relations. Trump and Carney also spoke by phone the previous night. The two countries are continuing negotiations ahead of the United States imposing new tariffs starting at 12:01 a.m. on the 19th on Canadian products worth about $20 billion (about 28 trillion won).
Canada is demanding a delay in the tariff imposition based on Section 338 of the U.S. Customs Act and the withdrawal of tariffs already imposed on automobiles and steel. The U.S. side, in contrast, is pushing back hard, demanding that certain Canadian provincial governments end boycotts of U.S. alcoholic beverages and roll back other retaliatory measures. U.S. alcohol accounts for a small share of the roughly $900 billion in bilateral trade, but for the United States it has become a key issue that must be eliminated.
◇ Canada's "ban on U.S. alcohol" hits U.S. liquor industry
Canadian State Governments implemented a ban on U.S. alcoholic beverages in March last year in protest of the U.S. government's 25% tariff measure. Currently, only two provinces, Alberta and Saskatchewan, have resumed sales of U.S. alcohol. Canada has proposed that if the United States withdraws the new tariffs and eases existing tariffs on steel and automobiles, it is willing to make concessions, including pressuring each provincial premier to bring U.S. alcohol back onto store shelves.
The Wall Street Journal (WSJ) said, "California merlot wine, Kentucky bourbon and Tennessee whiskey are piling up in Canada without being sold," adding, "Among Canada's responses to President Trump's economic pressure, few measures have irritated U.S. officials as much as this one."
In fact, members of the Trump administration are reacting sensitively to Canada's ban on U.S. alcohol. U.S. Commerce Secretary Howard Lutnick criticized Canada's sales ban as "outrageous," and U.S. Ambassador to Canada Pete Hoekstra said last year that this measure was one reason President Trump considers Canada "nasty." Earlier, the White House also cited the sales ban as one of several grounds for imposing a new 50% tariff on Canada.
The reason the United States is so sensitive to Canada's alcohol ban is that the U.S. liquor industry has relied heavily on exports to Canada. According to the WSJ, Napa Valley winery Crosby Roman exported an average of 10% of production of several wines to Ontario, and the founders planned to actively showcase new products to Canadian buyers. But after the trade dispute between the two countries, 100 cases of wine have been left without a destination and are being stored in a warehouse.
The hit to the U.S. liquor industry is also visible in the numbers. According to the Distilled Spirits Council of the United States, from March 2025, when several Canadian provinces began the sales ban, through December of the same year, U.S. exports of distilled spirits to Canada are estimated to have plunged 70% year over year to $60 million. During the same period in 2024, it was $203 million. According to U.S. Department of Agriculture data, wine exports to Canada, the largest buyer of U.S. wine, also fell 77%, from $460 million in 2024 to $103 million in 2025.
Lawson Whiting, CEO of Brown-Forman, which produces Jack Daniel's whiskey, said on an earnings conference call in June that 2025 net sales in Canada plunged 60%, pointing to the U.S.-Canada trade dispute as one of the headwinds the company currently faces.
◇ In Canada, high public support for "ban on U.S. alcohol"
By contrast, support in Canada for the ban on U.S. alcohol is high. In a poll conducted this month by Abacus Data, about 70% of Canadians supported maintaining the sales ban. The firm's CEO, David Coletto, said in a statement, "This is not simply about wine, beer or spirits," adding, "It reflects a broader view among Canadians that economic pressure should not be rewarded with immediate concessions."
Canadian State Governments also say they will not easily lift the ban on U.S. alcohol. British Columbia Premier David Eby said last month, after President Trump threatened new tariffs, "There is no chance U.S. alcohol will return to British Columbia's store shelves," adding, "I am proud of this, and I know British Columbians support it."
In Canada, whether to import alcohol is under the authority of the State Governments, so the federal government must persuade them. The WSJ reported that whether the Canadian federal government can persuade each province to put U.S. alcohol back on store shelves will likely depend on the specifics of the final agreement.
Laura Dawson, an expert on U.S.-Canada economic relations, said the sales ban on alcohol is a "double-edged sword" for the Canadian government, adding, "Having each province's alcohol sales bans as bargaining chips has provided a useful lever for the federal negotiating team. But at the same time, it is an instrument they cannot control, because there is no guarantee that each province will unilaterally lift it at the federal government's behest."