US-Canada trade war: Trump’s ban on Canadian alcoholic beverages takes effect, but bulk whisky is exempt. Here’s why

US President Donald Trump's ban on Canadian alcohol has taken effect, but bulk whisky and liqueurs are exempted. The move has deepened trade tensions, while Trump expects Canada to approach the US with a deal to resolve the dispute.

Trade tensions between the United States and Canada continue to deepen after US President Donald Trump's ban on Canadian alcoholic beverages took effect on Tuesday (local time).

The unprecedented move, which is set to affect $800 million worth of Canadian alcohol that Washington imported last year, has exempted whisky and liqueurs, creating a notable loophole for producers, CNN reported.

Why is bulk whisky exempted from the ban? What we know

Whisky and liqueurs, two of Ottawa's top alcoholic beverage exports to Washington, are exempt from the ban when shipped in containers larger than four litres. These bulk shipments are typically imported for further processing or bottling in the US, allowing them to continue entering the country without the ban or tariffs.

However, making the switch would require businesses to either have suitable containers available or source new ones, and then repackage the whisky into the smaller bottles typically sold in liquor stores. These additional steps could increase operating costs, which may eventually be passed on to consumers.

US-Canada trade war deepens

The move marks the latest salvo in a tit-for-tat trade war between the once-long-standing trading partners, which already includes sky-high tariffs and a ban on American alcoholic beverages in Ontario and other Canadian provinces.

Trump relies on the 1930s Act to ban Canadian booze

To enforce the ban on Canadian alcohol, US President Donald Trump is invoking Section 338 of the Smoot-Hawley Tariff Act of 1930, a controversial trade law blamed for worsening the Great Depression.

According to the statute, the 1930 Act permits the US President to levy tariffs of up to 50 per cent or, in some cases, ban several imports when another country discriminates against "commerce of the United States."

The report, citing experts, noted that the rapidly changing trade dynamics between the two long-standing allies could lead to further shifts. Hours before the ban took effect, the US President said he was confident Washington would benefit and anticipated that Ottawa would soon approach the US with a deal.

Trump expects Carney to approach with a deal

Addressing reporters on Monday (local time), Trump said, “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.”

He added, "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." He made these remarks at a time when Canadian Prime Minister Mark Carney had not made any statement regarding it.

However, it remains to be seen whether Canadian Prime Minister Mark Carney will approach Washington with a deal to ease the escalating trade tensions between the two countries.

About the Author

Swati Gandhi is a digital journalist with over four years of experience, specialising in international and geopolitical issues. Her work focuses on foreign policy, global power shifts, and the political and economic forces shaping international relations, with a particular emphasis on how global developments affect India. She approaches journalism with a strong belief in context-driven reporting, aiming to break down complex global events into clear, accessible narratives for a wide readership.<br><br> Previously, Swati has worked at Business Standard, where she covered a range of beats including national affairs, politics, and business. This diverse newsroom experience helped her build a strong grounding in reporting, while also strengthening her ability to work across both breaking news and in-depth explanatory stories. Covering multiple beats early in her career has helped her be informed about her current work, allowing her to connect domestic developments with wider international trends.<br><br> At Live Mint, she focuses on international and geopolitical issues through a business and economic lens, examining how global political developments, foreign policy decisions, and power shifts impact markets, industries, and India’s strategic and economic interests.<br><br> She holds a Bachelor’s degree in English (Honours) from the University of Delhi and a Master’s degree in Journalism and Mass Communication from Guru Gobind Singh Indraprastha University. Her academic training has shaped her emphasis on precision, analytical rigour, and clarity in writing. Her interests include global political economy and the intersection of geopolitics with business.<br><br> Outside work, Swati focuses on exploring her passion and love for food. From fancy cafes to street spots, Swati explores food like a true foodie.

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