The ban on Canadian alcohol deepens the trade war in North America.

With the orders that US President Donald Trump signed after Canada introduced its counter-tariffs on 8 September, the trade dispute between the two neighbouring countries is entering a new phase. From 29 September imports of most Canadian alcoholic drinks into the US, from whisky and wine to beer, will be completely banned. The same will apply to whey, to molasses and to motorcycles with larger engines as well. In this way the 50 per cent tariffs, which had applied to most of these products since late August, are being replaced by a total ban.

Trump is invoking Section 338 of the Tariff Act of 1930, a law from the era of the Great Depression. That section allows the president to restrict imports from countries that discriminate against American products. The measures apply without exception, even to goods that meet the terms of the North American agreement on free trade.

The American administration claims that Canada has discriminated against American producers of dairy products, alcohol and cars for years. Canada, in fact, protects its dairy sector with a system of quotas and high tariffs on imports, which Washington has criticised for a long time. In addition, as early as March 2025 many Canadian provinces removed American drinks from the shelves of state-run shops, after which American exports of alcohol to Canada fell sharply.

After the failed talks on 21 August, Washington imposed 50 per cent tariffs on Canadian goods worth about 20 billion dollars the very next day. Prime Minister Mark Carney then promised that Canada would retaliate dollar for dollar. Ottawa introduced its counter-tariffs of 15, 25 and 50 per cent on American products of almost the same value, including steel, household appliances, clothing, electronics and farm machinery. Trump, for his part, besides the bans, expanded the list of products with 50 per cent tariffs and ordered Canadian products to be excluded from US government purchasing. From 1 January next year, tariffs on Canadian cars are set to rise to 50 per cent.

For Canada, which sells more than two thirds of its exports to the US, the escalation is especially painful. Carney nevertheless argues that the country has everything it needs to reorient itself and to prosper. He admits that such a shift will come at a cost, but judges that inaction would be even more expensive. In his view, Canada had relied on easy trade with one partner for decades, while the US now wanted even greater dependence instead of a real economic partnership. The government therefore wants to invest more quickly in infrastructure and to expand trade with other markets.

Yet the damage hits both sides. American retailers will have to look for a replacement for Canadian drinks, while Canadian producers are losing their biggest market. Official talks have stalled for now, although the Canadian minister Dominic LeBlanc remains in contact with US Trade Representative Jamieson Greer. Without a deal by 29 September, the bans will take effect. In this way trade between the two neighbours, which was almost tariff-free for decades, would be reduced to measures and countermeasures.