The ongoing trade imbroglio occasioned by President Donald Trump's aggressively tariff-forward policy stance is roiling global markets across industries. The alcohol sector is being particularly hard hit, as many industry watchers warned could happen in the event of Trump-initiated trade wars with the European Union, Mexico, and Canada.
While the latest developments—including the president's threat earlier this week to impose a 200 percent tariff on European alcohol—are par for the course when it comes to the economic fallout of tariffs, Canada's retaliation to Trump's tariffs could cause long-term damage to American alcohol markets. Unique features of the Canadian system of alcohol regulation could dry up American alcohol sales within our northern neighbor's borders for decades.
In response to Trump's 25 percent tariff on Canadian goods, the Canadian government decided to pull all U.S. alcohol from the shelves of its provincial-run alcohol stores. Both the U.S. and Canada regulate alcohol at the sub-national level, but with a key difference: While most American liquor stores are privately owned (except in the remaining 17 retail control states), all but two Canadian provinces rely on government-run liquor stores.
