Trump just banned Canadian booze — but there’s a big catch

(CNN) — President Donald Trump’s ban on Canadian booze kicked in on Tuesday, an unprecedented move that underscores the breakdown in one of the closest trading relationships in the world.

The ban, which impacts $800 million worth of Canadian alcoholic beverages the US imported last year, marks the latest salvo in a tit-for-tat trading war that already includes sky-high tariffs and a ban on US booze in Ontario and other Canadian provinces.

“This is highly escalatory. The US has sent a very significant shot across the bow to Canada,” said Barry Appleton, distinguished adjunct professor of law and co-director of the New York Law School’s Center for International Law.

Appleton warned that trade tensions will hurt US companies.

“Brand America is in peril because of the trade war. Canadians are really pissed. That’s very hard for American brands,” he said.

However, experts say most American shoppers are unlikely to immediately notice the ban, in part because of workarounds, exemptions and the fact that distributors have had time to stock up on imported Canadian alcohol before the ban took effect.

At the same time, with the quickly evolving trade picture with Canada, anything can change on a moment’s notice. Hours before the ban took effect, Trump said he is confident the US will come out ahead, and expects Canada to come to the US with a deal soon.

“They want to have a deal with us, they call us all the time. The problem is that they’ve treated the United States very unfairly,” Trump told reporters on Monday.

“Over the next three or four weeks, they’re going to come to us and they’re going to say, ‘We’re going to get rid of all the tariffs,’” Trump said. Canadian Prime Minister Mark Carney has not said anything to that effect, however.

The fine print

The US consumer impact will likely be limited by the fine print.

At a high level, the Trump order bans Canadian alcohol imports under a certain size but allows for bulk shipments.

“Bulk booze that is going to be rebottled in the US can cross the border. Labeled booze under a certain size can’t,” said Appleton.

For instance, whisky and liqueurs, two of Canada’s top alcoholic beverage exports to the US, are exempt from the ban when sold in containers larger than four liters. In those cases, they also won’t face any tariffs.

But making that switch requires having the right containers on hand or sourcing them from scratch, then rebottling smaller sizes more commonly sold in liquor stores. All that could add to businesses’ costs – and potentially get tacked on to the prices consumers pay.

Crown Royal appears to be especially well-positioned since the company already sends bulk shipments of whisky to the United States, where it bottles all products sold domestically.

For beer, though, the ban is virtually impossible to get around without an American bottling arm because it covers the bottles, cans and kegs that consumers typically buy. A Canadian business could technically ship beer to the US in a tanker, but that’s hardly practical.

That means Americans could have a difficult – if not impossible – time purchasing Moosehead Breweries’ beer, since the company’s entire brewing and bottling operations take place within Canada.

Ahead of the ban taking effect, Moosehead scrambled to get shipments across the border, a difficult feat as other businesses were racing to do the same, said CEO Andrew Oland. That meant paying rush fees as well as diesel surcharges.

“Misery loves company because we’re all paying for this in the brewing industry,” he told CNN, adding that tariffs the US and Canada have imposed on aluminum have also driven up the cost of cans.

While only 15% of Moosehead’s sales come from the US, the complete loss of that customer base will certainly be felt, he said.

Beyond bulk exemptions, very few alcoholic beverages shipped from Canada were spared.

“Using import bans against an ally is unprecedented and a major deviation from US trade policy,” said Inu Manak, a senior fellow focused on trade policy at the Peterson Institute for International Economics. “This is a very symbolic thing to target. It sends a message and is another form of escalation aimed at getting Canadian negotiators back to the table. But Prime Minister Carney is not in a rush to get a deal before the (US) midterms.”

Some employees and executives in the alcohol industry expressed dismay about the escalating trade war.

“It’s really unfortunate our industry has gotten pulled into this,” said Chris Swonger, president and CEO of the Distilled Spirits Council of the United States (DISCUS), an industry trade group. “We American distillers export around the world. We don’t want tariffs applied to our products and we don’t want tariffs applied to our imports. We like to compete by sip and taste, not tariffs.”

Swonger described the ban on US alcohol by some Canadian provinces as an “unforced error” and expressed hope the US ban forces a change in policy.

“We’re working hard to get both governments back to the table to get this resolved,” he said.

Manak noted that Canadian provinces banned US alcohol only in response to threatened US tariffs.

“In playground parlance, the United Stated started it. That was Canada responding,” she said.

And now US officials are responding to that response, demonstrating how an escalatory tit-for-tat cycle gets out of hand.

Confusion on tap

A manager from a Niagara Falls, New York, liquor store located less than five miles away from the Canadian border told CNN he is confused and concerned about the US ban on Canadian alcohol.

“We have a lot of Canadian customers and a lot of Canadian liquor. This is not good for business,” said the manager, who spoke on the condition of anonymity. “People have freedom to drink, right?”

An employee at a Port Huron, Michigan, liquor store near the border with Ontario similarly told CNN that many of his customers buy Canadian whisky including Crown Royal, Black Velvet and Rich and Rare.

But the Michigan liquor store employee added that store traffic from Canadians has declined significantly over the past year or so.

“We have a lot fewer Canadian customers than we used to,” he said.

To impose the Canadian alcohol ban, Trump is relying on Section 338 of the Smoot-Hawley Tariff Act of 1930, the infamous trade law that exacerbated the Great Depression (and that was hilariously featured in the movie “Ferris Bueller’s Day Off”).

The law allows the president of the United States to impose tariffs of up to 50% or even ban certain imports when another country discriminates against “commerce of the United States,” according to the statute. But because no president before Trump has used the law this way, courts have not weighed in on what the administration must prove to meet its requirements.

In addition to alcohol, Canadian dairy products, such as whey, and motorcycles are also subject to bans, with the Trump administration similarly alleging unfair treatment of American businesses. In total, the bans cover close to $1 billion worth of goods the US imported from Canada last year, according to federal trade data.

The partial Canadian ban on US booze has been painful for the American industry.

Exports of US spirits to Canada plummeted by 70% after Canadian provinces started removing US wine and spirits from store shelves in March 2025, according to DISCUS.

But the Canadian alcohol industry is especially reliant on American consumers.

About 93% of Canadian spirits went to the United States in 2025, according to DISCUS.

“It’s going to be absolutely devastating for Canada and Canadian distillers,” said Swonger.

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