How much damage have Canada's booze bans done to the U.S. wine industry?

As we head up into the queen victoria daytime long weekend, unity of the busiest booze-buying weekends on the calendar, it's the back year where most Canadians are without access to American labels.

When Canadian liquor stores pulled American products from shelves in early 2025, it delivered a bruising to the U.S. Wine industry, and data shows just how much of a headache the booze ban has been for the U.S. As the two countries are set to begin free trade talks later this year.

According to trade data from the U.S. Census Bureau, wine exports from the U.S. To Canada dropped by $343 million US between 2024 and 2025, a devastating blow to the American wine industry.

Since March 2025, American alcoholic beverages have been absent from the shelves of almost all liquor stores across the country in retaliation for U.S. President Donald Trump's tariffs. An exception is in Alberta and Saskatchewan, where some sales have resumed due to the privatization of liquor stores in those provinces.

According to a recently published report, the U.S. Earlier this year identified the alcohol ban as one of several sticking points for upcoming trade talks. Other issues mentioned in the report include supply management, procurement policies and the Digital Services Tax.

"The United States continues to raise serious concerns regarding these actions and to press Canada to ensure that U.S. Alcohol beverages immediately and permanently return to all provincial and territorial markets," the report read.

After Canada, the next largest drop in U.S. Wine exports was to China, by $69 million US, underscoring just how large Canada's impact has been on the wine trade.

Data shows winemakers in the U.S. Found other international customers, with export bumps to places like South Africa, Belgium, Japan and the United Arab Emirates. The increase, however, was nowhere near enough to counteract the significant decline seen in other countries.

Before the trade battle, American wine exports had already seen recent declines, with global exports (excluding Canada) dropping by 18 per cent between 2022 and 2023.

The tariffs and trade war isn't the only situation impacting U.S. Wineries; the industry as a whole is also wrestling with a global demand slump. Winemakers are selling to a shrinking market. They face increased competition from ready-to-drink cocktails and seltzers on liquor store shelves. At the same time, generational trends and rising concerns about the health risks associated with alcohol consumption are leading to a decrease in overall sales.

"Fewer U.S. Consumers see wine as their preferred alcoholic beverage," reads a pre-trade-war report from Silicon Valley Bank in 2024.

The U.S. Has long enjoyed a trade surplus with Canada, exporting hundreds of millions of dollars more worth of wine than it brings in. However, that surplus has all but evaporated since the start of the trade war. Although Canada's wine exports to the U.S. Are modest, they have held steady over the past two years and have seen substantial growth since 2020.

While American liquor exports to Canada have dropped, they are importing more spirits than ever from Canada, including whiskies and ready-to-drink cocktails, the latter of which have exploded in popularity in recent years (think brands like Nütrl Vodka soda and Olé cocktails).

Meanwhile, beer trade had been declining long before the trade war started. The long-term slowdown coincided with the golden age of microbreweries as more consumers shunned large multinational brands in favour of local beermakers. According to beer writer and analyst Jason Foster, who keeps track of the figures, the number of breweries in Canada rose significantly between 2017 and 2022, climbing from 676 to 1,165. In 2025, that number dropped to 1,112.

But beer is facing the same headwinds as other beverages, while also dealing with steel and aluminum tariffs making production more expensive. 

While the booze ban may prove to be a valuable bargaining chip against the Americans, Canada isn't unscathed in the trade war. The LCBO in Ontario, one of the largest buyers of alcohol in the world, posted a $400 million revenue decline in its latest economic update, in part because it's losing out on about $70 million in high-margin American liquor sales.

However, that vacuum has fuelled a domestic bump in wine sales, with Ontario VQA wine sales seeing a massive surge.

In yanking American booze from shelves, Canada targeted both Democrat and Republican states. The ban has hit California's wine industry while drying up bourbon and whisky exports from Tennessee and Kentucky — all while the U.S. Is heading into a high-stakes midterm election cycle.

The Canada-U.S.-Mexico Agreement on trade (CUSMA), which was first negotiated during Trump's first term in office, is up for review this year.

The agreement says July 1 is the date that all three ​North American countries need to ​approve a renewal ⁠of the existing agreement or signal their intention to exit the pact. However, Canada's chief trade negotiator has said that the date shouldn't be viewed as a hard deadline, but more of a "checkpoint."

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