Commonwealth—Canada‘s alcohol business is in radical transformation as American alcohol consumption plummets dramatically across the country in the aftermath of rising trade tensions and shifting tastes. The drop in American spirit imports has not been offset by a similar increase in Canadian alcohol sales, leaving Canadian producers and retailers in limbo.
The campaign had begun earlier in 2025 when tariffs and bans were erected by some provinces against American liquor products, prompting domestic distilleries to anticipate a boost in local demand. The majority of the small producers, such as in Saskatchewan, saw this as an opportunity to expand their share of the market by replacing the gap left by the American brands’ withdrawal. Even a few distilleries began developing new products that were designed to replace the best-selling U.S. liquors pulled off shelves.
The optimism, however, was short-lived. Saskatchewan’s government, in June 2025, revoked its ban on the importation of liquor from the U.S. because of consumers’ demand for greater selection. The move sidetracked local distilleries’ business plans and new product launches, months in development. Saskatchewan and Alberta are the only two provinces that have done away with the prohibition on American liquor imports, while the rest of the provinces retain prohibition, hence offering a broken and uncertain market.
Despite initial expectations that American import reductions would open up new opportunities for Canadian manufacturers, the overall impact has been less than expected. In a report released recently, the Distilled Spirits Council of the United States indicated American spirit exports to Canada declined 85 percent during the second quarter of 2025. Most of the decline was due to provincial prohibition and retaliatory tariffs, disrupting normal trading patterns between the two countries.
Ever since the Canadian government reduced its federal tariff on American spirits on September 1, 2025, the ongoing provincial prohibitions have held down a return to the pre-dispute business level. The incident brought economic hardship across the border for producers, wholesalers, and retailers, according to trade officials.
Canadian manufacturers have not yet capitalized on the opportunity created by the decline in U.S. imports. Numbers by Spirits Canada report that the total liquor sales in Canada declined by nearly 13 percent earlier in the year, and that equates to consumers just drinking less booze overall and not reselling it for Canadian alternatives in return.
Consumers’ purchasing patterns in other stores have drastically changed. Liquor stores have reconfigured their front facades to prefer Canadian offerings more and American labels less, relegating domestic wine and spirits to floor displays and reserving American brands for less visible niches. Through these realignments, overall levels of sales remain below expectations, indicative of a larger drift away from consumer spending on liquor.
Canadian products have seen modest advances in some of these markets amid the overall slide. Canadian-bottled wine is up about 25 percent, and domestic liquor is up about 35 percent in some establishments. American spirits are off more than 50 percent from a year ago, though, and that is a clear reversal in consumer attitude.
Analysts in the industry assert that Canadians are increasingly gaining a “Buy Canadian” attitude, purchasing from local producers as economic patriotism. Trade disputes and familiarity with superior Canadian alternatives have triggered the growing popularity of native-made brands.
Economists and market analysts are confident that while they can reverse this trend in the long run, it won’t happen immediately. The Canadian consumers pay more attention to where their products come from and prefer purchasing products made by domestic industries. Even though future trends forecast American spirits such as bourbon to be trendy again, the current trend toward Canadian products offers signs of a long-run trend. Because the market is catching up with changing trading conditions and consumer attitudes, foreign and domestic manufacturers will need to adjust. Canada’s spirits sector currently reflects a broader global trend of re-evaluating supply chains, trade agreements, and domestic manufacturing issues in an increasingly complicated economic environment.
