U.S. wine export market struggling after Canada ‘pulled the plug,’ expert says

Karl Storchmann, executive director of American Association of Wine Economists, joins BNN Bloomberg to discuss the demand outlook for wine as U.S. imports plunge in Canada.

After U.S. President Donald Trump announced a series of tariffs targeting Canadian goods earlier this year, Canada was quick to respond with retaliatory measures aimed at American sectors that rely on exports north of the border, one of which was the wine industry.

The result was a 93 per cent drop in American wine exports to Canada in April, the biggest year-over-year decline in decades. Since Canada is the largest buyer of exported U.S. wines, the ongoing trade dispute has plunged the industry into crisis, according to one expert.

“Wine firms here in the U.S. thought that a tariff on (imported) goods, including wine from Canada, would be a boon, but it has turned out the other way around,” Karl Storchmann, executive director of the American Association of Wine Economists, told BNN Bloomberg in a Wednesday interview.

“Canada pulled the plug and the exports of U.S. wine to Canada are virtually down to zero or they’re closing in on zero… and exports to Canada account for more than a third of all U.S. exports by value, and that is massive.”

Trump’s decision in March to impose blanket 25 per cent tariffs on most Canadian goods entering the U.S. was met with swift retaliation at both the federal and provincial level in Canada.

• Trade War coverage on BNNBloomberg.ca

The Liquor Control Board of Ontario (LCBO), which typically imports around US$1 billion worth of American alcohol each year, was directed to remove all U.S. wine and spirits from its shelves by Premier Doug Ford. Similar actions were taken in other provinces, including British Columbia.

After those tariffs were removed following Trump’s “Liberation Day” trade announcement, imports resumed, but at a much slower pace, and the federal government continues to impose a 25 per cent tariff on U.S. wine entering the country.

But even though American wine is again available for Canadians to purchase, strong “Buy Canada” sentiment has exacerbated the problem for U.S. producers, who are encountering another issue domestically, Storchmann noted.

“If you cannot ship out millions of dollars (worth) of wine, it will stay here, but the pot is closed, and the lid is on the pot. It must lead to price drops in the U.S., so it’s not turning out to be a boon, it might be the absolute opposite,” he said.

Storchmann said Canadian purchasers of U.S. wine tend to buy premium products from high-end producers in California – and lots of it.

“Canada is a very, very important market for upscale wine and it’s in enormous quantities. The premium wine markets are Canada and China,” he said.

American wine exports to China, the third largest purchaser of U.S. wine, also took a hit in April, as Beijing and Washington were in the midst of a trade war of their own. China bought 30.5 per cent less American wine in April than it did in the same month in 2024.

Storchmann said that on top of all this, overall demand for wine around the world has been on the decline for the last two or three years.

“Wine consumption in the U.S. and globally has been going down probably pretty much starting after COVID-19, so that is another problem,” he said.

“That’s why Canada virtually pulling the plug makes it especially hard.”