UPDATE: US TARIFF DELAY AND CANADA’S RESPONSE

On March 6, 2025, in response to demands from U.S. automobile and agriculture sectors, President Trump signed an executive order delaying tariffs for one month until April 2, 2025, on goods that meet the rules of origin under the Canada-U.S.-Mexico Agreement (CUSMA). Additionally, the executive order includes a reduction in import tariffs on Canadian potash to 10%.

CUSMA Origin Requirement: To qualify for tariff relief, exports to the U.S. must adhere to CUSMA rules of origin. Goods previously exported under the Most Favored Nations (MFN) origin system must switch to CUSMA origin to benefit from reduced tariffs. Products that entered the U.S. between March 4 and 7, 2025, prior to the latest tariff change, will remain subject to the higher tariff rates without the possibility of refund.

Canada’s Tariff Response:

• Canada has maintained the Phase I tariffs on U.S. imports, amounting to $30 billion, which were first implemented on March 4, 2025.
• The $125 billion Phase II tariff list has been suspended pending further U.S. action on April 2, 2025.
• Although Phase II has been delayed, Finance Canada continues to 21-day consultation process, allowing industry stakeholders to submit arguments for product exemptions.
• The Phase II proposed retaliatory tariff measures are valued at $200 billion CAD, offering an opportunity to reduce up to $75 billion CAD from the list.

Wine Growers Canada Position: Wine Growers Canada (WGC) has officially registered its opposition to the inclusion of several industry inputs on the U.S. tariff list, such as glass bottles, corrugated boxes, grape vines, grapes, grape juice, must, and bulk wine (see list in memo).

Call for Industry Feedback: Wineries are encouraged to register their feedback on the proposed tariff list before April 2, 2025, using the Finance Canada consultation form. To provide additional information or arguments, stakeholders are invited to email consultations@fin.gc.ca.

Conclusion: The delay of U.S. tariffs and the reduction on Canadian potash offer temporary relief. However, ongoing vigilance and active participation in the Finance Canada consultation process will be crucial in mitigating potential adverse impacts on Canadian industries. Businesses should take advantage of available federal programs to help navigate these challenges.

Wine Growers Canada has released a detailed list of wine industry inputs on the US tariff list, as well as information on federal programs to support businesses and workers and how to qualify under CUSMA exports to the US.

UPDATE: PROVINCIAL RESPONSE

This March 6 announcement of a delay in tariffs follows the March 4, 2025, initial announcement of US imposed 25 per cent tariffs on nearly all Canadian goods and Canada’s initial announced response. In British Columbia, Premier David Eby announced that as part of the provincial government response, all “red state” products will be pulled from BC Liquor Store shelves.

More Detail on the BC Liquor Distribution Branch (LBD) Response:

Effective immediately, the LDB is halting the importation of U.S.-made liquor products manufactured in red states. BCLIQUOR (BCL) stores are immediately halting the retail sale and removing from store shelves all U.S.-made liquor products manufactured in these states. These impacted products will continue to be available for purchase through LDB wholesale distribution channels until existing inventory in British Columbia sells through. This means private liquor stores, restaurants, bars and pubs will continue to be able to order impacted U.S.-made liquor products from existing inventory already in the province, while it lasts, including inventory in third-party warehouse. U.S.-made liquor products from non-red states will be unaffected at this time and will continue to be imported and sold by the LDB. However, as announced by the federal government on March 3, 2025, Canada will be applying a Tariff Surtax of 25 per cent on liquor products of U.S. origin. The LDB is reviewing Canada Border Service Agency guidelines and wholesale pricing updates to reflect the tariffs on impacted products will be communicated once details are confirmed.

A list of impacted U.S.-made liquor products manufactured in red states is available on the LDB Wholesale Operations website. A list of Canadian-made liquor products is also available here.

UPDATE: INTERPROVINCIAL DIRECT-TO-CONSUMER ALCOHOL SALES

A landmark agreement was announced on March 5, 2025, signaling a breakthrough in interprovincial direct-to-consumer (DTC) alcohol sales. Most Canadian provinces have committed to removing longstanding barriers, paving the way for consumers to purchase alcohol directly from producers across provincial lines.

The governments of British Columbia, Alberta, Saskatchewan, Manitoba, Ontario, Quebec, New Brunswick, and Nova Scotia have agreed to facilitate interprovincial DTC sales for Canadian alcohol products. While BC, Manitoba, and Nova Scotia already permit these sales, Wine Growers Canada (WGC) and Wine Growers British Columbia have been advocating for years to expand this policy nationwide. The federal government and all provinces -except Prince Edward Island and Newfoundland and Labrador – have now pledged to eliminate these trade barriers. More details can be found in the official statement: First Ministers’ Statement. The announcement has already garnered significant media coverage, including by The Globe & Mail and CBC News.

Some provinces have issued their own statements, while others are expected to follow in the coming weeks. Wine Growers Canada and Wine Growers BC are closely monitoring these developments, tracking legislative progress, and continuing to engage with federal and provincial trade officials to ensure full implementation.

AGLC LIQUOR MARKUP RATES

On February 27, 2025, the Government of Alberta announced changes to the AGLC liquor markup system, in alignment with Budget 2025. The announcement included markup changes for wine, to take effect on April 1, 2025, and updates to the AGLC’s small manufacturer policy, including annual worldwide production thresholds.

The AGLC has advised that, starting April 1, 2025, an additional ad valorem markup will be applied to wine based on the invoice price of the product. In addition to the flat ($/L) markup rate applied to all wines, products with an invoice price greater than $15.00/L will be subject to supplementary markup based on the following phased approach:

• A five per cent rate applies to the invoice price greater than $15 per litre and not exceeding $20 per litre.
• A 10 per cent rate applies to the invoice price greater than $20 per litre and not exceeding $25 per litre.
• A 15 per cent rate applies to the remaining invoice price greater than $25 per litre.

In response to these notifications of the implementation of a new ad valorem markup on wine, WGC partnered with WGBC and WGO to pen a letter issued to Alberta’s Minister of Service Alberta this week, to express our deep concerns, highlighting that this new tax would present a significant challenge for our industry and requesting an urgent meeting to discuss the matter further. We outlined that Canadian wine producers face rising costs of production, as well as the potential for tariffs on numerous U.S.-sourced inputs, which will negatively impact Canadian wineries.

WGBC will be meeting with the AGLC next week to discuss this further.

UPDATE: WINE SECTOR SUPPORT PROGRAM APPLICATIONS

The Wine Sector Support Program (WSSP) will accept applications for the 2025-26 program year from March 3, 2025 to May 23, 2025. An early application period has been implemented given the possibility of a spring federal election. The program was put in place following sustained advocacy by Wine Growers Canada (WGC), and in its first three years has delivered an average $0.97 per litre, valued at $213 million.

The WSSP offers short-term financial support in the form of non-repayable grants. Grants are provided to licensed Canadian wineries based on their production of bulk wine fermented in Canada from domestic and/or imported primary agricultural products.

The application form for 2025-26 begins on March 3, 2025 and is available at Step 4 of the following webpage: https://agriculture.canada.ca/en/programs/wine-sector-support, which should be completed, alongside the required documents.

For this application period, eligible wine must have been produced (completed initial fermentation) between April 1, 2024 and March 31, 2025. Please note that a new application must be submitted to the WSSP each year. Applications submitted to the WSSP in previous years are not transferable and will not be considered for 2025-26 grant funding.