US-Canada alcohol trade dispute: Overview
- Democratic control of Congress could increase pressure on US trade policy, though the impact on alcohol market access remains unclear
- Canadian retaliation over US tariffs removed American wine and spirits from shelves, sharply reducing exports and disrupting sales channels
- US spirits exports to Canada fell 70%, while wine exports dropped 78%, resulting in major losses for producers
- European and Canadian wine producers have expanded their market share as consumers shifted away from unavailable US brands
- Any resolution would still leave US producers facing a challenge to rebuild distribution networks and recover lost shelf space in Canada
The US midterm elections could change the political landscape in Washington, with implications for the country’s trade dispute with Canada.
Democrats have won control of both the House of Representatives and Senate, giving them more power to challenge the administration’s decisions. The newly elected Congress will take office in January 2027.
The result comes as Washington and Ottawa continue talks over a wider trade agreement. Canadian Prime Minister Mark Carney has said progress has been made, although a deal has yet to be reached.
For US wine and spirits producers, the stakes are high. The dispute has led to American alcoholic drinks being removed from many Canadian retailers, cutting off an important export market and giving competing countries an opportunity to gain ground.
But could the changing political landscape help unlock a resolution – and, if it does, will US brands be able to reclaim the ground they have lost?
How did US alcohol end up off Canadian shelves?
American alcohol was removed from Canadian shelves after trade tensions escalated in early 2025. Following US tariffs on Canadian goods, Canada retaliated by withdrawing US-made alcoholic drinks from its liquor stores and other retail outlets.
Quebec’s liquor retailer SAQ was among the first to act. At the request of the Quebec government, it removed all US products from its stores and website in March 2025. It also stopped supplying grocery stores, bars and restaurants. The retailer said its US product inventory was worth approximately C$27m.
The restrictions have had a significant impact on US producers, with exports to Canada falling sharply.
US wine and spirits producers face significant losses
Canada was one of the most important overseas markets for US spirits. According to the Distilled Spirits Council of the United States (DISCUS), exports to Canada fell 70% year on year between the introduction of provincial sales bans in March 2025 and December 2025. Canada also dropped from the second-largest export market for US spirits in 2024 to sixth-largest in 2025.
US wine producers have also been hit hard. Canada accounted for 36% of all US wine exports in 2024, worth approximately US$460m. After American wines were removed from most Canadian retail shelves in March 2025, exports fell 78% to US$103m in 2025 – a loss of US$357m.
The Wine Institute estimates that lost export value reached approximately US$522m by June 2026, compared with what exports would have been if shipments had continued at 2024 monthly levels.
A spokesperson for the Wine Institute said smaller, family-owned wineries had been particularly affected, with many having spent years building relationships with Canadian importers, retailers and consumers.
“Almost overnight, their wines disappeared from shelves, established sales channels were disrupted and wines from other countries took their place,” the spokesperson said.
Who has gained ground in Canada’s drinks market?
The removal of US products has given other wine-producing countries an opportunity to grow their market share in parts of Canada.
Figures from Quebec’s liquor retailer SAQ show that France’s share of still wine volume sales rose from 33% in 2025 to 34.6% in 2026. Italy’s increased from 23.3% to 24.2%, while Spain’s rose from 11.2% to 12%.
Canadian wines also gained ground, increasing their share from 3.7% to 4.1%. Chile and Portugal recorded gains too. US wines, which accounted for 6% of SAQ’s sales in 2025, were absent from the 2026 figures following their withdrawal.
SAQ said the removal of US wines had encouraged consumers to try alternatives, with Canadian wines among those benefiting.
Canada’s beer market presents a different picture, with domestic brewers less exposed to the trade dispute than wine and spirits producers.
“More than 90% of the beer Canadians purchase each year is brewed in Canada, supporting jobs and communities across the country,” says Beer Canada.
However, the organisation says the industry has still faced higher costs for key inputs and greater uncertainty as a result of ongoing trade tensions.
Could the midterms change anything?
The midterm results could give Democrats more scope to challenge the administration’s trade policy, but it is unclear whether this will help resolve the dispute. Industry groups are hopeful that ongoing talks between Washington and Ottawa will restore access to the Canadian market.
“Based on recent public comments by President Trump and Prime Minister Carney, as well as interest in the tariff issue among Democrat leaders, we are hopeful Canada and the U.S. can reach an agreement soon,” says Chris Swonger, president and CEO of DISCUS.
A spokesperson for the Wine Institute said the election could create opportunities for greater congressional involvement, but stressed that “the need for a resolution transcends political parties”.
Alcohol retailing and distribution in Canada are largely controlled at provincial and territorial level, giving individual governments a say in whether American products can return. This means a federal trade agreement would not guarantee an immediate return to shelves.
Can US brands win back Canadian shelves?
Even if the restrictions are lifted, US producers will still need to secure their place in Canadian stores.
SAQ confirmed that the decision to allow US products back onto its shelves rests with the Quebec government, not the retailer. If sales resume, SAQ intends to sell its remaining warehouse stock first.
The Wine Institute said many relationships with Canadian importers and retailers remain strong, and US wineries are willing to invest in rebuilding their presence. However, it warned that the longer restrictions remain in place, the harder it could be to recover lost market share.
The Wine and Spirits Wholesalers of America (WSWA) also warned that other countries have had time to build relationships and secure shelf space.
“When American products lose access to established international markets, competitors from other countries have an opportunity to step in, build relationships and capture shelf space that may not be easy to reclaim,” says Francis Creighton, president and CEO of WSWA.
“Restoring access to an important export market would create new commercial opportunities, but rebuilding lost distribution and retail relationships takes time,” he added.
