Words Richard Hope
Early February brought intense uncertainty to the Pacific Northwest as President Trump announced a 25% tariff on all Canadian products exported to the United States.
Having ridden a wave of grievances and discontent to the White House, Trump famously declared: “Tariff is the most beautiful word in the dictionary.” While many have grown weary of politics, this pronouncement exposed significant vulnerabilities in British Columbia’s wine and alcohol industry.
As North America’s fifth-largest wine-producing region, B.C.’s wine industry employs over 14,000 across the province. However, recent years have brought enormous challenges. The 2023 wildfires damaged groves across the Okanagan, followed by an intense, deep frost in 2023/24 that devastated vines across the province, resulting in up to $145 million in direct revenue losses.
The announcement of tariffs by Trump drew immediate condemnation from across the political spectrum at local and federal levels. In B.C., Premier David Eby commanded the liquor board to stop buying liquor from “red states” and remove American-produced liquor from the shelves. This compounded across the country, and with sales of American liquor nearing nearly $1 billion per year, the impact was immediate. After an 11th-hour negotiation with PM Justin Trudeau, Trump delayed slapping tariffs against Canada for another 30 days.
In response to the crisis, Pierre Poilievre, leader of the opposition, announced his package of measures, including one particularly notable proposal. He called to “bring in truly free trade within Canada by knocking down interprovincial barriers to replace north-south trade.” Canada remains unique among nations in maintaining internal trade barriers – buying wine from Ontario in B.C. and vice versa is virtually impossible. While limited agreements exist between neighbouring provinces, such as the B.C.-Alberta trade pact, true free trade remains elusive in Canada.
Despite Canada’s essentially tariff-free status for imported wines, internal barriers make it nearly impossible to purchase products from across the country. These restrictions trace back to Canada’s founding in 1867 when the constitution granted provinces significant control over regulations, viewing these powers as key to provincial autonomy. The International Monetary Fund identified a potential $80 billion boost to the Canadian economy in 2019 simply by opening up internal trade. Yet, no significant action has been taken to address this issue.
Another crucial element in this fermented drama is the limited presence of Canadian wine available internationally. B.C. exports only 3% of its annual production, with 18% going to the U.S. Ontario, the country’s largest producing region, exports just 5%. High production, bottling and taxation costs make retail sales across the border particularly challenging. Canadian wines compete primarily in the premium market due to these high costs. With American consumers generally seeking more affordable options, Canadian producers often find themselves priced out of the market. While some Canadian wines reach European shelves, they remain extremely hard to find.
In 2024, total wine production reached 73 million litres, which is expected to drop by 50% in 2025 and 2026. Recovery isn’t likely until 2027, when production begins to rise again.
To address immediate supply challenges, regulators have permitted wineries to import grapes from abroad for their 2024 vintages, allowing them to create a vintage for 2024. While local wine prices will likely rise as supply falls, this could spark a market revival.
Canadian wine producers face an uncertain future in a world increasingly affected by climate change and complicated by harsh tariffs between trading partners. The industry’s resilience will be tested as it navigates these challenges while seeking new opportunities in both domestic and international markets.
Richard Hope is immersed in the wine trade, specialising in helping wine lovers discover new favourites. Keep in touch: Kibo.rjhope@gmail.com
