President Donald J. Trump followed through on his threat to levy 25 percent tariffs on all goods from Canada, except energy imports, which will face a 10 percent tariff. The new trade duties will take effect on Feb. 4. The move immediately impacted wineries on both sides of the border, as the Canadian government responded with 25 percent tariffs on many U.S. products, including all alcoholic beverages, raising prices on American wines and whiskies.
The drinks industry had hoped to gain an exception from the new tariffs, but those pleas appear to have been denied. Trump also said he intends to impose tariffs on the European Union soon, in another move with significant implications for wine and spirits.
Similar tariffs on Mexico were paused for one month after negotiations between the two nations’ governments, sparing price hikes on Tequila, mezcal and Mexican beers for now. The White House also imposed 10 percent tariffs on all Chinese products. The Administration justified the moves as a response to what it has declared a national emergency of illegal immigration and drug smuggling.
Canadian Retaliation
Canadian Prime Minister Justin Trudeau declared on Feb. 1, just a few hours after Trump’s announcement, that Canada would impose 25 percent tariffs against $155 billion worth of American goods in response. American alcohol products were the first named as targeted by those tariffs.
“Like the American tariffs, our response will also be far-reaching and include everyday items such as American beer, wine and bourbon,” Trudeau said in a press conference. The duties will also go into effect on Feb. 4.
The premiers of both Ontario and British Columbia announced that American alcoholic beverages will be removed from the shelves of the provinces’ liquor stores. “As the only wholesaler of alcohol in the province, LCBO [the Liquor Control Board of Ontario] will also remove American products from its catalog so other Ontario-based restaurants and retailers can’t order or restock U.S. products,” Ontario premier Doug Ford posted online on Feb. 2.
A Major Market for American Wine
The trade war comes at a time when many wineries are facing a challenging market, with wine sales declining and inflation and high interest rates raising the cost of businesses. And Canada is a critical market.
“Canada is the single most important export market for U.S. wines, with retail sales in excess of $1.1 billion annually,” said Robert P. Koch, president & CEO of the trade group the Wine Institute, in a statement. “Wine is one of the U.S.’s most highly value-added agricultural exports, so any loss of access to the Canadian market will damage the entire U.S. wine sector. Our wineries have spent decades building market share and brand loyalty across Canada. These actions put all of this at risk. We urge both governments to work together to resolve this dispute as soon as possible to minimize the economic harm.”
A drinks trade coalition Toasts Not Tariffs—representing U.S. alcohol producers, wholesalers and retailers—released a letter on Feb. 2 urging President Trump to exempt wine and spirits from being tariffed.
“Given the unique nature of the U.S. wine and spirits sectors, the heavy dependence of U.S. restaurants and other small businesses on the sale of these products, and the challenging U.S. marketplace, we respectfully request that wine and spirits be excluded from any new or universal tariffs,” the trade group said in a letter to the White House. “Importers, distributors, retailers—and especially restaurants—operate on razor-thin margins and rely on the profitability of alcohol sales for their survival. New tariffs on imported wine and spirits would harm, not help, American businesses, threatening the livelihood of tipped workers and small businesses across the country.”
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Source : https://www.winespectator.com/articles/america-imposes-tariffs-on-canada
