US-Canada trade war: Trump’s ban on Canadian spirits goes into effect, but bulk whiskey is exempt. Here’s why | Today’s news
Trade tensions between the United States and Canada continue to escalate after US President Donald Trump’s ban on Canadian alcoholic beverages took effect on Tuesday (local time).
The unprecedented move to touch $800 million worth of Canadian alcohol that Washington imported last year exempted whiskey and liqueurs, creating a significant loophole for producers, CNN reported.
Why is bulk whiskey exempt from prohibition? What we know
Whiskey and liqueurs, two of Ottawa’s most important alcoholic beverage exports to Washington, are exempt from the ban if transported in containers larger than four litres. These bulk shipments are usually imported for further processing or fulfillment in the US, allowing them to continue entering the country without prohibition or tariffs.
However, making the switch would require businesses to either have suitable containers available or secure new ones and then repackage the whiskey into smaller bottles typically sold in liquor stores. These additional steps could increase operating costs that may ultimately be passed on to consumers.
The trade war between the US and Canada is intensifying
The move is the latest salvo in a trade war between the former trading partners that already includes sky-high tariffs and a ban on American alcoholic beverages in Ontario and other Canadian provinces.
Trump relies on a 1930s law banning Canadian booze
To enforce a 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.
By law, the 1930 law allows the U.S. president to impose tariffs of up to 50 percent, or in some cases ban several imports, when another country discriminates against “United States commerce.”
Citing experts, the report noted that rapidly changing trade dynamics between the two long-time allies could lead to further shifts. Hours before the ban took effect, the US president said he was confident Washington would benefit and expected Ottawa to approach the US with a deal soon.
Trump expects Carney to come forward with a deal
Speaking to reporters on Monday (local time), Trump said: “They want to make a deal with us; they keep calling us. The problem is that they have treated the United States very unfairly.”
He added: “Within the next three or four weeks, they’re going to come to us and say, ‘We’re going to get rid of all the tariffs.’ He made these remarks at a time when Canadian Prime Minister Mark Carney did not make any statement about it.
But the question remains whether Canadian Prime Minister Mark Carney will approach Washington with a deal that would ease escalating trade tensions between the two countries.
