A new report from the Office of the United States Trade Representative has singled out Canadian provincial bans on American alcohol sales and the federal government's "buy Canadian" procurement policy as prominent trade irritants. The document, published this week, outlines a range of perceived barriers affecting U.S. exports to its northern neighbor.
Provincial Alcohol Bans Draw Sharp Criticism
Implemented in early 2025 as a retaliatory measure against American trade tariffs, provincial prohibitions on selling U.S. alcohol remain a particularly contentious issue. The report states that market access barriers imposed by Canadian provincial liquor control boards severely hinder exports of American wine, beer, and spirits.
"These barriers include cost-of-service mark-ups, restrictions on product listings, reference prices, label requirements, discounting policies, and distribution policies," the report detailed. It emphasized that the United States continues to raise serious concerns and is pressing Canada to ensure U.S. alcohol beverages return permanently to all provincial and territorial markets.
Economic Impact on U.S. Suppliers
The bans are having a tangible impact. According to the U.S.-based Distilled Spirits Council's mid-year report, provincial restrictions prompted an 85% drop in distilled spirits exports to Canada, falling below $10 million in the second quarter of this year. This decline is especially challenging for an industry that relies heavily on international sales, with exports having quintupled since 2000.
Canada, alongside the U.K. and the European Union, accounted for approximately 70% of all American liquor exports in 2024, valued at around $2.4 billion. Currently, only Alberta and Saskatchewan have resumed selling American alcohol, while the rest of Canada, including Ontario—home to the LCBO, the world's largest single purchaser of alcoholic beverages—maintains the bans.
'Buy Canadian' Procurement Policy Under Scrutiny
Launched in December 2025, Canada's "buy Canadian" procurement policy aims to prioritize Canadian vendors, workers, and materials for large-scale government contracts. This policy shifts from a "best effort" criteria to a "clear obligation" to use Canadian steel, lumber, and other materials on projects exceeding $25 million.
The U.S. report notes that additional implementation stages are expected to expand these requirements to contracts valued at CAN $5 million (approximately $3.6 million USD) or more by spring 2026. "U.S. companies have reported concerns regarding additional barriers to compete for federal contracts in Canada, including being forced to share information about their boards of directors and prove their Canadian subsidiary's independence from the U.S. parent company," the document reads.
Broader Trade Barriers Identified
Beyond alcohol and procurement, the report lists several other trade barriers, including:
- The application of the Goods and Services Tax (GST) to U.S. exports to Canada
- Agricultural supply management policies
- Canada's "zero plastic waste agenda"
These measures are part of a broader slate of issues that the U.S. Trade Representative monitors across over 60 nations and trading blocs. The report underscores ongoing tensions in U.S.-Canada trade relations, highlighting how domestic policies in one country can quickly become international flashpoints.
The identification of these irritants comes at a time when both nations are navigating complex economic landscapes, with protectionist tendencies on both sides of the border testing the resilience of long-standing trade partnerships. The U.S. continues to advocate for the removal of these barriers to ensure fair market access for American businesses and products.
