SASKATOON, Sask. — Canada’s cereal crop farmers will eventually feel the pain of new U.S. tariffs on Canadian alcohol, says an industry official.
“It will take some time to see the impact, but we’re a little worried to see where this is headed,” said Kate Sauser, policy manager with Grain Growers of Canada.
You can follow all our coverage of the current tariff situation here.
“Hopefully, the ramifications aren’t too bad down the road.”
Crops like corn, rye, barley and wheat are used in the production of Canadian spirits and beer, which are now facing stiff 50 per cent tariffs in the United States.
Sauser said the impact will vary be crop.
Canadian farmers planted 25 million acres of wheat this year, a crop that has many uses in markets around the world.
By contrast, they only planted 339,000 acres of rye, and whiskey is still an important market for that crop.
She worries the tariffs could eventually lead to a reduction in acres for a small crop such as rye.
“It might throw a fork in the plan for some farmers when they’re making their crop decisions in the next couple of years if this stays in effect,” said Sauser.
The United States accounts for 93 per cent of Canada’s total spirits exports, according to Spirits Canada.
That critical market to the south contributes 48 per cent of the $2 billion in total annual Canadian spirits sales.
That is why the industry was sent reeling when U.S. president Donald Trump slapped a 50 per cent tariff on Canadian alcohol and other goods effective Aug. 22.
The tariff also applies to spirits-based ready-to-drink beverages, such as coolers and seltzers.
“The lessening demand from the export market will eventually trickle down to lessening demand for these (crops) in the value-added space,” said Sauser.
Luke Chapman, vice president of federal affairs with Beer Canada, said his sector escaped relatively unscathed from the tariffs.
“Beer is in a somewhat fortunate position in that we are a very domestic industry,” he said.
“Our trade exposure is pretty minimal.”
In 2025, $29 million of Canadian beer was exported to the U.S.
That compares to the $9.1 billion consumed domestically.
However, the 50 per cent U.S. tariff will cause pain for some because it effectively prices Canadian beer out of its largest and closest export market.
“There are certainly individual brewing companies, particularly in Quebec and the Maritimes, that this will have a direct impact on the future of their business,” said Chapman.
International brewers also occasionally pay Canadian brewers to use excess capacity to make their brands for the U.S. market. That business could also be lost.
Chapman said Canada’s counter-tariffs could drive up the cost of inputs, such as aluminum cans and can sheet, increasing production costs.
Beer Canada is asking Ottawa to support the industry by eliminating its excise escalator policy, which automatically increases the rate of tax on beer production annually.
Peter Watts, managing director of the Canadian Malting Barley Technical Centre, said the tariffs do not directly affect his member companies.
“We haven’t seen any duties on barley or malt exports,” he said.
“It’s just on alcohol.”
Sauser said agriculture needs to be protected from the repeated tariff attacks from our largest trade partner.
“It’s a scary time,” she said.
“We don’t want to see any more CUSMA-compliant goods take on a tariff in the future.”
About the author
Reporter/Analyst
Sean Pratt has been working at The Western Producer since 1993 after graduating from the University of Regina’s School of Journalism. Sean also has a Bachelor of Commerce degree from the University of Saskatchewan and worked in a bank for a few years before switching careers. Sean primarily writes markets and policy stories about the grain industry and has attended more than 100 conferences over the past three decades. He has received awards from the Canadian Farm Writers Federation, North American Agricultural Journalists and the American Agricultural Editors Association.
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