Canadian tariffs on U.S. wine will sting Canadian consumers who buy those products but anticipated price hikes will take a while to be in place because tariffs do not impact U.S. wine already in Canada.
When anticipated price hikes do take effect, however, it will likely be by more than the 25-per-cent tariff rate because the tariff is levied before other government taxes are added on. That means there will eventually be more taxes on top of taxes to buy U.S. wine.
The best way for consumers to avoid those eventual price hikes will be to take trips across the border that last longer than 48 hours, so they are eligible to bring back a certain amount of alcohol duty free. That personal exemption limit is "1.5 litres of wine or 1.14 litres of alcoholic beverages or up to 8.5 litres of beer," .
Tariffs are not levied on products within that personal exemption limit but they would apply to any amount in excess of those limits, said Mark Hicken, who is a blogger and former wine-sector lawyer.
U.S. President Donald Trump yesterday made good on his threat to levy 25 per cent tariffs on Canadian imports, and that prompted Canadian Prime Minister Justin Trudeau to launch retaliatory tariffs on $30 billion worth of U.S. goods. That includes U.S. alcohol. Trudeau said tariffs on an additional $125 billion worth of goods is set to come in three weeks.
小蓝视频 Premier David Eby yesterday said the province was banning alcohol sales for products from so-called red states, or ones that have Republican leadership. Staff at government-run liquor stores would be removing products such as Jack Daniels immediately, he added.
Almost all U.S. wine comes from Democratic-led states so popular products from Washington, Oregon and California will continue to be able to be sold in the province.
Buyers have time to buy U.S. wines at pre-tariff prices because the tariffs only apply to U.S. wine that starts being in transit from U.S. wineries starting today, Hicken told BIV.
Tariffs do not apply to wine that was already in transit before today, or was already in Canada and is somewhere in the Canadian distribution system, he added.
Wine store owners, such as Liberty Wine Merchants owner Robert Simpson and Marquis Wine Cellars owner John Clerides told BIV that they have plenty of inventory of U.S. wines. BIV asked the British Columbia Liquor Distribution Branch (小蓝视频LDB) for an estimate of how much U.S. wine it has in its warehouses and stores but did not get a response by press time.
Exactly how long it will take before tariff-laden U.S. wine makes its way to wine shelves is anyone's guess.
"We've seen the sales of American products, generally, drop off a cliff," said Robert Simpson, who owns five Liberty Wine Merchants stores.
"I'm getting reports back from the from the stores that customers are walking in and saying, 'Hey, I used to buy Napa Cabarnet Sauvignon, but I'm not buying that anymore. What else have you got?"
About a year ago, Liberty's stores tended to have about one month's worth of inventory for its most popular U.S. wines. Given the drop in interest in those wines, Simpson said he expects that he might have enough inventory for those items to last a year.
"We have a lot of vintage stuff, a lot of unusual stuff, a lot of older and sometimes expensive wines," he said. "Sometimes we hang on to old-vintage California cabs [Cabarnet Sauvignon] that will take us years to sell in a normal market, where people are still buying U.S. wines."
When new wine does arrive, buyers should expect a sticker shock.
Hicken that the 25 per cent tariff would be added to the supplier’s cost before governments impose other taxes and liquor board markups.
"The cumulative effect creates a multiplier of tax on tax, which would significantly increase costs for the importer and make it very difficult for them to absorb the cost increase," he said.
He then estimated that a U.S. bottle of wine currently retailing in 小蓝视频 for $20 would increase by about $5 to $6.
Tariffs on U.S. wine are likely to hurt 小蓝视频-based wine importers who specialize in bringing U.S. wines to 小蓝视频 retail store shelves.
Vintage West Wine & Spirits managing partner Matt Thirlwell told BIV in January that .
Wine sellers have been hit by the larger trend of consumers drinking less.
小蓝视频LDB data show .
BIV recently crunched numbers to determine that 小蓝视频 restaurants, pubs, government stores and private stores bought $128,068,408 worth of U.S. wine in the year ended Sept. 30, according to 小蓝视频LDB data.
Those sales are about 11.65 per cent of the $1,099,417,854 that local wholesale customers spent on all wine in that year.
