Position Paper: Immediate Repeal of Alberta’s Embargo on U.S. Liquor Products

2025-06-04

Position Paper: Immediate Repeal of Alberta’s Embargo on U.S. Liquor Products

To:

The Honourable Dale Nally

Minister of Service Alberta and Red Tape Reduction

Government of Alberta

Mr. Joffrey Hotz

Deputy Minister

Service Alberta and Red Tape Reduction

Government of Alberta

CC:

Ms. Kandice Machado

Chief Executive Officer

Alberta Gaming, Liquor and Cannabis (AGLC)

From:

Import Vintners & Spirits Association (IVSA)

Date: May 30, 2025

Executive Summary

The Import Vintners & Spirits Association (IVSA) urges the immediate repeal of Alberta’s embargo on U.S.-made liquor products. Originally introduced in response to federal surtaxes under the Canada Border Services Agency’s United States Surtax Order—triggered by U.S. tariffs on Canadian goods—the embargo no longer serves a valid policy objective. With those tariffs now limited to non-USMCA-compliant products, the continued enforcement of Alberta’s embargo has become economically harmful, operationally disruptive, and politically indefensible. It disproportionately affects small businesses, the hospitality sector, and Alberta consumers. The time has come to lift this outdated measure, restore market fairness, protect Alberta jobs, and reaffirm the principle of consumer choice.

1. Background and Policy Context

Alberta’s liquor embargo was adopted as a provincial response to federal countermeasures against U.S. trade actions. While broader trade tensions remain, Alberta’s continued enforcement of this narrow, selective ban on U.S. liquor products is both disproportionate and inconsistent with the treatment of other U.S. imports. No comparable restrictions apply to other categories of U.S. goods.

2. Economic and Employment Impacts

a) Harm to Alberta’s Wine and Spirits Agents:

Alberta’s liquor industry is composed primarily of small and medium-sized businesses. These companies—more than 800 licensed agents—are embedded in communities across the province and depend on a broad portfolio of international products. U.S.-made products account for nearly 20% of all wine and over 11% of all spirits sold in Alberta. Blocking these imports undermines their business models and puts Albertans out of work. In 2024 alone, total U.S. wine & spirits sales in Alberta reached $292 million, representing 6% of the total beverage alcohol sales in the province. This significant market share underscores the potential for substantial economic disruption and directly impacts the viability of numerous Alberta businesses. Furthermore, wine is a perishable commodity with a limited shelf life; approximately 90% is made to be consumed within 12 months. Failure to act now will result in significant losses and the destruction of existing inventory.

b) Imminent Layoffs and Business Closures:

Given that 1035 people are employed in Alberta’s beverage alcohol wholesale industry, the 6% of total beverage alcohol sales attributed to U.S. wine and spirits directly supports at least 62 jobs. The imposition of this embargo directly puts these jobs at risk, leading to an estimated $5.58 million in lost wages annually for Albertan workers. The ripple effect across the hospitality supply chain could result in thousands more, particularly in restaurants and bars that rely on these products. Nationally, the impact of lost sales translates to an estimated $73 million in lost wages for workers in the beverage alcohol sector. Applying the provincial share, the consequences for Alberta’s broader economy are significant, with an estimated $8.37 million in broader economic activity loss due to reduced consumer spending.

c) Strain on the Hospitality Sector:

Alberta’s hospitality industry, which employs over 250,000 people, depends on a wide and competitive selection of liquor to meet customer expectations. The embargo reduces product diversity, limits revenue opportunities, and threatens front-line employment. Nationally, the beverage alcohol industry contributes significantly to tax revenues, with an estimated $15 million in lost federal tax revenue and $7 million in provincial income tax anticipated due to disruptions like this embargo. These lost revenues could otherwise support vital public services.

d) Broader Labour Market Effects:

Alberta’s April 2025 unemployment rate of 7.1% underscores the need for policies that promote—not restrict—job creation. A targeted embargo on a key industry weakens the province’s overall labour recovery and could lead to increased costs for social support programs. The estimated $2.16 million in EI costs annually in Alberta due to potential job losses further strains the province's social safety net. /

3. Disproportionate, Unclear, and Arbitrary

Alberta’s liquor embargo appears to be the only targeted countermeasure still in place against U.S. goods. There is no clear public rationale for why this sector continues to be singled out, nor are there defined criteria or timelines for lifting the measure. This lack of transparency undermines confidence in government policy and complicates business planning for hundreds of affected companies.

4. Consumer Impact and Market Distortion

Adult Albertans are being denied access to a significant category of international products. While remaining pre-embargo stock provides a temporary buffer, inventories are dwindling. Without the ability to restock, consumers face fewer choices and less competition, potentially leading to higher prices. The loss of $29.2 million in sales tax revenue due to the inability to sell these products ultimately impacts the services that the provincial government can provide to Albertans. Additionally, the province stands to lose $198.5 million in lost provincial markup revenue due to the embargo. This situation is further compounded by the simultaneous imposition of a new ad valorem tax structure, which has resulted in universal price increases for targeted products, negatively impacting consumer demand for those products still available in the market.

5. Recommendations

The IVSA urges the Government of Alberta to:

Immediately repeal the embargo on all U.S.-made liquor products to restore market functionality and limit further economic damage.

Engage with industry stakeholders to ensure future trade responses are fair, transparent, and proportionate.

Explore mitigation measures to offset financial losses incurred by Alberta agents, particularly for products previously approved and ordered before the embargo.

Conclusion

The U.S. liquor embargo is no longer an effective or justified trade countermeasure. It harms Alberta’s economy, jobs, and consumers—without delivering any discernible benefit. The potential loss of at least 62 direct jobs, $5.58 million in lost wages, and a broader economic ripple effect of $8.37 million annually in Alberta underscores the urgent need for the immediate repeal of this embargo. Furthermore, the significant loss in provincial revenue, including $29.2 million in sales tax and $198.5 million in lost provincial markup revenue, necessitates a policy reversal to protect Alberta’s fiscal health and the livelihoods of its citizens. The perishable nature of many of these products, coupled with new tax structures driving up prices, only exacerbates the negative impacts on businesses and consumers.