Canadians love American booze, spending hundreds of millions on their favourite beverages every year. But a tariff war between both countries could put Canadian tipplers in bad spirits.
U.S. President Donald Trump could hit Canada with tariffs as early as next week, raising the risks that Ottawa would impose retaliatory tariffs on the United States amid growing fears of a trade war.
“If the president does choose to proceed with tariffs on Canada, Canada will respond and everything is on the table,” Prime Minister Justin Trudeau said during a news conference Tuesday in Montebello, Que.
Trudeau signalled that Canada’s counter-tariffs could cover the value of Trump’s proposed 25-per cent tariffs on all Canadian goods.
“I support the principle of dollar-for-dollar matching tariffs. It’s something that we are absolutely going to be looking at if that is how they move forward,” he told reporters.
One of those potential targets, based on previous retaliatory tariffs? American booze.
In 2023, U.S. alcohol exports to Canada amounted to US$262 million (C$377 million) a year, with American whiskey accounting for US$76 million (C$110 million) of that.
Jack Cunningham, assistant professor at Trinity College at the University of Toronto, told Global News that Kentucky bourbon and Tennessee whiskey would be “perfectly fine targets” for retaliatory tariffs from Ottawa.
“Look, I like Kentucky bourbon as much as anybody else, but going without it is a fairly modest inconvenience in the grand scheme of things, particularly when you look at it in the context of the serious damage that a tariff war would inflict on both economies,” Cunningham said.
Nicholas Ti, an economist at Toronto Metropolitan University, said tariffs are bound to turn Canadian consumers away from U.S. booze.
The evidence, he said, was in Trump’s previous tariff battle with the European Union.
“Only six years ago, Trump started a trade war with the EU, and one of the policies that they adopted in the EU was like a 50 per cent tariff on a bunch of American products, particularly whiskey,” he said.
“The value of American whiskey exports to the EU fell by over 20 per cent.”
Sylvanus Afesorgbor, a professor at the University of Guelph’s Department of Food, Agriculture and Resource Economics, said shifts in consumer behaviour would depend on a concept called the elasticity of demand – the change in the demand for a product if its price shifts.
“Whether the price goes up or not, some people may still want to consume the same product because they’ve developed a taste for it. They may still want to buy even with a higher price,” he said.
He said the tariff threat is a reminder for Canada to look to other trade partners.
“We have to think about diversifying, because it looks like we are very much dependent on the U.S.”
Ti said elasticity will differ based on what kind of drink is seeing a price increase.
“The elasticity of this demand is lower for beer. So overall, if you increase beer taxes, it has a smaller effect on beer consumption than if you increase, for example, spirits taxes.”
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He said heavy drinkers are likely to reduce the amount of alcohol they drink, while occasional drinkers may tolerate higher cost options.
He said a bigger factor in determining consumer behaviour is allocating shelf space — something that’s already a prominent threat in Ontario.
“I’ve sent a direction to the LCBO that if these tariffs come to clear off every bit of U.S. alcohol off the shelves. Let’s start promoting more Ontario-made wines, and the vodkas, the spirits. That’s what we need to do,” Ontario Premier Doug Ford said Monday.
Ford has encouraged other provinces to consider the same.
Ti said the Ontario government’s monopoly on alcohol sales in Ontario “gives them enormous ability to dictate consumer behaviour through things like promotions, shelf placement, and of course, the decision of which brands to stock or not.”
What are the alternatives?
Davin de Kergommeaux is the author of Canadian Whisky: The Essential Portable Expert, a guide on Canadian whisky. He said Canadian whisky lovers need not worry about a lack of options if U.S. whisky is off the shelves or more expensive.
“I don’t think we should be wringing our hands because we have whisky up here that is every bit as enjoyable in all categories – entry level, medium (quality) whisky and some really top notch premium whiskies as well,” he said.
“I think it’s just a matter of going to the liquor store and asking the clerk for help you if you can’t find it yourself.”
Kergommeaux said while many Canadians have a taste for American whisky, Canadian whisky has historically been popular south of the border. During two major events in U.S. history — the American Civil War and the Prohibition era — when American liquor stocks grew dry, Americans looked north for good whisky.
“It has never lost that popularity. It is still more popular than American whisky in the U.S.,” he said.
Joshua Richolt is the beverage director at the NH Collection New York Madison Avenue Hotel and was raised in Alberta.
“Canadian whisky is already basically the same spirit as American whisky, as both are corn-based. Bourbon is more often distilled at a lower proof, however, and a lot more of the congeners, oils, and other flavouring agents are more heavily present as a result,” he said.
However, experts say there are alternatives for bourbon too.
Stephanie Lusk, a chef and social media influencer, said, “An alternative type of whiskey that we have here in Canada is called rye whisky and is made with Canadian wheat. This is really great because there are so many different options and flavors and it’s also closer to home.”
Kergommeaux said the crisis could bring opportunity for Canadian distillers, while giving consumers a chance to “rediscover” Canadian whisky.
What about wine and beer?
In 2024, Canada imported wine worth C$51.4 million from the U.S.
Most American wine comes from California, but Lusk says there are domestic wine growing regions that Canadians could look to if they want to find more domestic options – particularly Niagara Falls, Ont., and British Columbia.
Richolt said Canadian craft beer is already replacing American beer in many markets.
“I live in NYC and travel home numerous times each year to Alberta. Beer is a local tradition and best served fresh. There is nothing better than discovering smaller craft breweries and their individual specialties,” he said.
“The most popular cocktail whisky cocktail is the whisky sour. You can make that with any Canadian whisky,” Kergommeaux said.
Lusk recommends using rye whisky and giving it more of a Canadian flair.
“One of the nice things about Canadian whiskies is that they actually complement maple syrup really well,” she said.
Whisky sours are typically made with whisky, lime juice, egg whites and simple syrup.
“You could replace the simple syrup with some maple syrup and bourbon with Canadian whisky. And now you have a Canadian rye sour,” she said.
Richolt said most traditional recipes were not originally based on bourbon.
“Rye, which was more common, can often be substituted and is often done so in the best cocktail bars in the world. Many of the best rye producers in the world are in Canada, just ask Whistlepig, High West and many other American brands that use Canadian rye,” he said.
Lusk noted there are also nonalcoholic options.
“There are nonalcoholic whiskies, wines, beers. Just having something in your hand at a party or at an event, often makes you feel like you’re part of it and you forget that you’re not even drinking the alcohol at all,” she said.
Lusk also recommends looking up recipes for mocktails.
“They’ve still got a little bit of sugar, though,” she said.
https://globalnews.ca/news/10972476/trump-tariffs-us-booze-in-canada/
