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President Donald Trump’s latest tariff threat has pushed Canada back to the negotiating table. An additional 50% tariff on specified Canadian goods, scheduled to take effect Aug. 19, appears to have caught Ottawa flat-footed. The federal government is now scrambling to limit the damage to several industries, including roughly $1.5 billion in agri-food trade involving Canadian alcoholic beverages, whisky and dairy products.

CHARLEBOIS: Is Ottawa about to break its own supply management law? Back to video

Start with the provincial bans on American alcohol. It was never entirely clear what governments expected to accomplish. Perhaps the bans were intended to create negotiating leverage. But excluding products from any market eventually imposes costs at home as well as abroad.

Since the bans began in spring 2025, provincial liquor authorities have incurred costs related to storage, inventory management and the disposition of unsold American products. Consumers have also faced fewer choices and less competitive pressure on prices. The policy certainly hurt American producers, but it was never cost-free for Canadian liquor boards, restaurants, retailers or consumers.

Canadian products eventually gained sales and market share in certain provinces and categories. In Quebec, Canadian spirits performed particularly well, while Ontario-made wines and other domestic products also benefited. But the bans did not generate a broad increase in alcohol consumption or sales volume. Some purchases shifted to Canadian brands, others moved to non-American........

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