HALIFAX — A group of U.S. distillers says Canadian retailers are giving unfair advantages to local spirits, including what they say are “discriminatory” markups in Nova Scotia and other provinces.
The U.S. Distilled Spirits Council sent a 77-page document to the office of U.S. Trade Representative Jamison Greer outlining the obstacles the U.S. sector faces around the world. That includes six pages on Canada, where all but two provinces have largely removed American alcohol from shelves in response to U.S. President Donald Trump's tariffs.
Among other things, producers are unhappy with the preferential markup that Nova Scotia Liquor Corp. offers local spirits. They say Nova Scotia rum, whiskey and other spirits are marked up between 50 and 80 per cent depending on how they are bottled, and all imported products are marked up by 160 per cent.
U.S. distillers say the markups do not comply with World Trade Organization rules or the U.S.-Mexico-Canada Free Trade Agreement.
“It protects local products and discriminates against imported spirits,” the document says, which also states that Alberta, Saskatchewan, New Brunswick, PEI, and Newfoundland and Labrador provide similar benefits to local companies.
The council is asking Greer, who Trump appointed in February, to call on Canada and these provinces to end the “discriminatory surcharge on distilled spirits” set by the NSLC.
NSLC communications director Allison Himmelman said the provincial government is in the best position to address trade policy.
“However, I will say that our customers tell us that local products matter to them. Historically, we have offered preferential markups on local products as part of our support for Nova Scotia's liquor industry and ensuring a level playing field for local producers,” Himmelman wrote in an email.
Nova Scotia sales representatives could not immediately be reached.
In February, as the trade war began, NSLC removed about $14 million worth of American alcohol from its shelves. In December, the company began selling off its existing stock of booze in the U.S., pledging to donate $4 million of the proceeds to local food banks. Sales of local products rose 13.4 per cent to $44.1 million in the provincial distributor's latest quarter.
Most U.S. provinces phased out alcohol earlier this year, and Alberta and Saskatchewan brought it back to shelves this summer. U.S. manufacturers say their sales in Canada fell 68 percent in April and fell 85 percent in the second quarter to less than $10 million. They're asking Greer to support repealing provincial sales bans.
American distillers are also attacking the Ontario Liquor Control Board, including a policy that requires producers to send their product directly from their distillery to the board. “As a result of this policy, companies cannot use central distribution centers in the United States or other countries to deliver their brands to the LCBO,” the document states.
Liquor producers note that the LCBO is seeking millions of dollars in fines for suppliers who do not offer the lowest price in Canada, retroactive to 2023. It said the fines could force some U.S. producers to exit Canada's largest alcohol market. Several prominent manufacturers, including Canadian companies, have raised legal challenges to the policy.
In Quebec, spirits producers have problems with the Société des Alcools du Québec's pricing regime, which limits the number of times per year producers can raise prices. While the liquor industry acknowledges that the situation has improved, they argue that “SAQ pricing policies may still not be fully aligned with today's fast-paced retail environment,” noting that the LCBO is allowing for more frequent changes. The council wants its members to be able to adjust prices monthly or 13 times a year.
Liquor producers are unhappy with the SAQ's 2023 ban on “excessive packaging”, which they say is too broad and creates uncertainty for its members.
In British Columbia and Saskatchewan, liquor producers say wholesale margins on spirits are fairly transparent, but retail margins are “arbitrary and opaque… they are not published and can vary depending on… the product,” which is contrary to trade agreements.
They also complain that the 100 per cent federal excise tax exemption for ciders made entirely from Canadian-grown apples and honey “exacerbates the uneven playing field that exists in the Canadian alcoholic beverage market.”
American distillers say the industry is worth more than $200 billion, and the number of American distillers has grown from fewer than 100 in 2005 to more than 3,100, fueled by international trade. Exports have more than doubled over the past 20 years, reaching US$2.4 billion in 2024.
Some prominent U.S. manufacturers have cited the trade war and the Canadian boycott as at least part of their financial woes. Bourbon maker Jim Beam recently announced it would be closing its flagship Kentucky distillery for at least a year due to declining sales.
“Increasing exports and opening new markets, rather than tariffs on imports, represent the most realistic path to returning to growth and global competitiveness,” spirits producers say.
“Accordingly, we urge the Administration to ensure a permanent return to zero tariffs with our key trading partners and to prioritize new market access opportunities in ongoing trade negotiations.”
This report by The Canadian Press was first published Dec. 25, 2025.
