U.S. Spirits Exports to Canada Drop 70% Amid Trade Tensions

U.S. spirits exports to Canada have plummeted by nearly 70% since March 2025, according to the Distilled Spirits Council of the US (Discus). Exports fell to $60 million in 2025 between March and December compared to $203 million in the same period in 2024 according to spirits business reports.

The decline comes after most Canadian provinces removed U.S. spirits from retail shelves in response to Trump's tariffs. Only two provinces, Alberta and Saskatchewan, have since resumed selling American spirits. The move was part of a broader effort by Canada to support domestic alcohol production and reduce reliance on U.S. imports.

Tariffs and boycotts have had a significant impact on major U.S. brands like Jack Daniel’s, Tito’s Handmade Vodka, and Wild Turkey Bourbon. Brown-Forman, the company behind Jack Daniel’s, saw its Canadian sales drop by 59% in the nine months to January 2026.

Why Did This Happen?

Trade tensions began when President Donald Trump imposed tariffs on Canadian goods in 2024. In response, Canada introduced a 25% tariff on U.S. alcoholic products in March 2025. While the tariff was lifted in August 2025, most provinces continued to boycott U.S. spirits in retail stores.

The policy shift created a sharp disruption in the U.S. spirits market. Canada had been the second-largest export market for American spirits in 2024 but fell to the sixth-largest by 2025. The economic impact was evident in the U.S. spirits industry, with exports declining by nearly 63% to $89 million in 2025.

How Did Markets Respond?

The Liquor Control Board of Ontario (LCBO) reported a decline in its sales. For the third quarter of 2025, the LCBO recorded $1.88 billion in sales, down from $1.98 billion in the same period in 2024. Tito's Handmade Vodka was notably absent from the top 10 best-selling spirits.

Despite the ban on U.S. spirits, major global brands like Smirnoff and Crown Royal maintained their dominance in Canadian sales. Diageo and Pernod Ricard reported growth in sales in Canada despite the trade tensions. Diageo's sales increased by 2.3% in Canada in the first six months of 2025, while Pernod Ricard saw a 13% increase.

What Are Analysts Watching Next?

The trade dispute has created uncertainty for both U.S. and Canadian businesses. The Distilled Spirits Council of the US has called for a return to a 'zero-for-zero' tariff environment. Chris Swonger emphasized that the industry is urging both governments to restore permanent tariff-free trade.

Investors are also watching for potential shifts in trade policy. The Supreme Court recently ruled that Trump lacks the authority to impose broad tariffs under the International Emergency Economic Powers Act. However, Trump has continued to pursue protectionist policies, including tariffs on Canadian steel, aluminum, and automobiles.

Market analysts are also looking at the broader economic implications. The trade dispute has had a ripple effect on the North American economy. Canada's trade deficit with the U.S. widened in 2025, and U.S. tariffs on Canadian exports have impacted sectors like manufacturing and agriculture.

Recent developments show signs of cautious optimism. Canadian and U.S. trade officials are resuming discussions to address the trade tensions. Canadian Minister for U.S. Trade Dominic LeBlanc is in Washington for high-level talks with U.S. trade representative Jamieson Greer.

The outcome of these negotiations will have significant implications for both countries. If a resolution is reached, it could help stabilize the spirits industry and restore economic ties. However, if the tensions persist, further economic and political damage could occur.