Canadian provinces have begun a massive withdrawal of American alcohol from store shelves in response to the duties imposed by the Donald Trump administration. The move caused outrage among US producers, and the CEO of Brown-Forman, which produces the legendary Jack Daniel’s, called the situation “more devastating than taxes”.
The United States imposed a 25% duty on imports of goods from Canada and Mexico, which triggered an economic war between the neighbours. Ottawa’s response was swift: restrictions on American beverages, including whiskey, wine, and beer.
Alcohol front in the trade war
Canada’s decision has affected the largest US alcohol brands. The country’s leading provinces, such as Ontario and British Columbia, have effectively banned American alcohol from sale, which could result in millions of dollars in losses for producers.
Lawson Whiting, CEO of Brown-Forman, said that such actions “destroy sales and cause even more damage than the duties”. However, he reassured investors by pointing out that Canada accounts for only 1% of the company’s total market.
A much bigger blow is expected in Mexico, which has also been hit by US trade sanctions. According to Brown-Forman’s financial report, the Mexican market accounts for 7% of their global revenue, and the company is closely monitoring further developments there.
Boycott of Made in USA: implications for the market
Trump’s economic pressure has only increased patriotic sentiment among Canadians. Local producers are growing in popularity, and citizens are consciously choosing national goods, refusing to buy American products.
The loss of the Canadian market to American alcohol is only part of the global problem. Brown-Forman has already recorded a decline in demand not only in Canada, but also in the US and Europe. The only regions with positive dynamics are Mexico and Poland, which partially compensates for the losses.
The trade confrontation between Washington and Ottawa is only getting worse, and both American and Canadian companies are suffering from it. Are the parties ready to seek a compromise, or will the world witness a new economic Cold War?
