An escalating trade war between the United States and Canada has created significant economic uncertainty.
Since taking office two months ago, President Donald Trump has announced, paused, implemented, and rescinded tariffs on various Canadian products, ranging from energy to aluminum to automobiles.
In response Canada has imposed retaliatory tariffs and boycotts on billions of dollars worth of American goods, including wines and other alcohol products. These actions are being felt in California, and threaten to upset decades of work spent gaining access to this market.
Bill Easton is the President, Winemaker and Winegrower at Terre Rouge and Easton Wines in Amador County. He spoke recently with Insight Host Vicki Gonzalez.
Easton said he spent 30 years developing business relationships across multiple Canadian provinces. The Canadian wine trade makes up between 10-12% of Terre Rouge and Easton’s gross business, which at times increased to around 20% pre-COVID.
“Canada is significant for my business, not only from a monetary standpoint but from an appreciation standpoint,” Easton said.
However, over the last two months, Easton said he has seen a noticeable decrease in business from the U.S.’s northern neighbor. “I have had purchase orders canceled,” Easton said.
“In both Ontario and Quebec… all American product has been removed from shelves, even if they paid for it. It's beyond a boycott. They’re unavailable.”
Easton provided several emails to CapRadio showing how some of these removals rolled out.
On Feb. 3 the government of Quebec announced that all U.S. alcoholic products would be removed from store shelves and the Société des alcools du Québec (SAQ) website, and supplies to grocery stores, bars and restaurants would be stopped. Orders, private imports and promotional commitments for U.S. products would also be cancelled.
These were stopped two days later after the U.S. granted a reprieve on tariffs, but on March 4 Canadian officials reintroduced the cancellations and removals.
“We will intentionally leave the shelves empty for a while to show our support for the measures in response to the tariffs imposed by the United States,” SAQ officials wrote in a release, saying U.S. products would be largely replaced by Canadian ones.
Easton said he has received apologies and messages from some of his Canadian agents amid the ongoing trade war, but said there is little anyone can do.
“I have a lot of friends there, I've developed relationships with people that were wine buyers and sommeliers,” he explained. “It's just like somebody's pulled the carpet out from under us.”
Looking at long-term impacts, Easton said trust is an important factor in international trade, but noted the uncertainty the tariff fight is creating. He voiced concerns about other potential tariffs, as his company sells to various international buyers.
Easton specifically pointed to a threat Trump made in March to place a 200% tariff on imported European wines. He said such a measure, coupled with European retaliation, could damage his operations and potentially crush some of his partners.
“A specialty producer like me… works with distributors around the United States,” Easton said, adding that these individual distributors sell portfolios of wines, including both international and California varieties.
“They sell my wine, they sell Napa Chardonnay, they sell Sonoma Pinot Noir… that's how they structured the business,” he said. “If you pull some bricks out of that structure, that business is going to collapse.”
Wine tariffs impact local canning business
The local impacts of international tariffs on wine extend beyond just grapes and drinks.
The Can Van is a mobile beer and wine packaging company based in Sacramento that specializes in canning. The company started in 2011 by offering canning to local breweries, and in 2015, it added wine canning.
The company’s co-founder and CEO Jenn Coyle said since Canada stopped purchasing California wine, her business felt the impact immediately. She said if the tariffs remain in place and Canada doesn’t buy California wine, her company will be unable to do its job, and no one will be paid.
“We have a client who makes a canned wine product specifically for the British Columbia liquor store,” Coyle said. “We were supposed to be canning it this week, actually, and a couple weeks ago, they said, ‘Well, they canceled this order, so we have to cancel this project.’ So there's a lot of people who are impacted by these policies at all levels.”
Large cans of beer being filled by the Can Van at a Sacramento brewery. (Photo courtesy of Jenn Coyle)
The cans for the Rosé wine order have already been printed. The wine is in the tank. It was on their schedule ready to go, but Canada will not take the product.
“We don’t get anything out of that,” Coyle said. “It's very disruptive to our schedule because we've booked the time, we've scheduled things. We've scheduled people, materials and all of that. So we try to move people around and do other projects, but it definitely has an impact.”
Decades of business relationships, trade at risk
Pete Downs is the President of Family Winemakers of California, an advocacy group for small and family-owned producers in the state - including Terre Rouge and Easton.
He said in an email the organization is still analyzing specific impacts of these tariffs and boycotts, “but just from our initial evaluation we know that it will not be positive.”
“We know that the shelf space that we have worked so hard to secure is in jeopardy and could be lost forever,” Downs wrote.
When tariffs were first announced in early February the California Wine Institute, an organization advocating for the state’s wineries and related businesses, called for a resolution. In a release President and CEO Robert Koch said over $1 billion worth of U.S. wines are sold in Canada annually.
“Wine is one of the U.S.’ most highly value-added agricultural exports, so any loss of access to the Canadian market will damage the entire U.S. wine sector,” Koch wrote.
“Our wineries have spent decades building market share and brand loyalty across Canada. These actions put all of this at risk.”
Rana Sarkar, Consul General of Canada in San Francisco spoke on CapRadio’s Insight last month about the trade war’s impact on the Canadian and Californian economies, including the wine market. “We’re the biggest buyer of California wine,” Sarkar said.
Recent data from the Canadian government shows California annually exports around $510 million worth of alcohol and other beverages to Canada. Sarkar said the boycotts and removal of American alcohol are part of a larger change in preferences among Canadians.
“You go into a Canadian grocery store now, you start to see products being marked as Canadian, American and Mexican,” Sarkar said. “People are choosing not to buy American products right now, and that’s fairly dramatic.”
Sarkar said Canada and the United States are allies and partners despite the trade war, but added that things need to “get serious.”
“If there are things that we need to address in the trading relationships… we should sit down in an orderly fashion and have those conversations,” he said.
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