Canadian backlash erupts over Trump’s tariffs. Trade war hits wine, spirits. What’s next?

 Though the tariffs on goods imported to the U.S. from Canada and Mexico have received a temporary reprieve from President Donald Trump, negative consumer sentiment from Canadians about U.S. products has many American companies on edge.

American liquor, wine and spirit brands have been pulled off shelves in many Canadian stores as part of retaliatory measures to Trump's tariffs that are temporarily on hold until April 2.

Lawson Whiting, CEO of Brown-Forman, the maker of Jack Daniel's, said the removal of his company's whiskey from Canadian store shelves was "worse than a tariff."

Pulling liquor, alcohol products from Canadian shelves hurts businesses

"It's literally taking your sales away completely" and "a very disproportionate response to a 25% tariff," Whiting said during an earnings call on Wednesday.

Whiting said Canada only represents about 1% of Jack Daniel's sales, "so we can withstand" it. Still, Whiting said it was disappointing that some Canadian consumers would not be able to get bottles of Jack Daniel's "because it's a big brand in Canada and popular, but we will see how this this plays out and the rumors continue to float around Canada every day."

The California wine industry is also concerned about Canadian consumer backlash.

"Canada is the single most important export market for U.S. wines with retail sales in excess of $1.1 billion annually," Robert P. Koch, president and CEO of the Wine Institute said in a press release. The tariffs and threat of tariffs come at a particularly hard time as the alcohol industry is facing "unprecedented challenges in the marketplace," he said.

On Thursday, Trump took executive action to postpone for one month, until April 2, new tariffs of 25% that had begun on imports from Canada and Mexico.

American companies are worried about Canadian consumer backlash

Other American company leaders are similarly nervous about Canadian consumer backlash, said Greg Portell, senior partner and global markets leader at strategy and management consultancy firm Kearney.

"The emerging trade war is causing discomfort at the most senior level of business," Portell told USA TODAY. "It's never a good situation when brands lose distribution. Even more troubling is when the loss is due to something outside the company's control."

Companies are also concerned about a "domino effect: pulling products doesn't just hit immediate revenue – it disrupts long-term demand forecasting and inventory planning, leaving companies scrambling to adapt," Darpan Seth, CEO of Nextuple, an omnichannel order management advisory and software firm told USA TODAY.

"Retailers opting for removal over price hikes also amplify the 'Buy Canadian' movement, which could lock U.S. brands out of shelf space indefinitely," Seth said.

Alcohol is the first target of tariff ire, but other industries could follow

The Jack Daniel's response is "the first bottle to drop" in the tariff dispute, but is more symbolic and a negative hit for the brand, said Brian Bethune, a professional financial economist at Boston College.

Other industries that could see negative reactions from Canadian consumers include U.S. meat and agriculture products, U.S. apparel, U.S. autos, and hotels and airlines, with anger and fears denting consumer sentiment and luxury expenditures, said Joshua Stillwagon, an associate professor of economics at Babson College.

Iconic American brands will be most affected, said Charlie Skuba, faculty emeritus at Georgetown University's McDonough School of Business.

'Buy Canadian' sentiment can grow with consumer anger

A decision to remove U.S. brands from distribution in Canada "goes hand-in-hand with a 'Buy Canadian' sentiment," Skuba said. "By pulling American products from the shelves, a Canadian retailer can build its bonds with Canadian consumers who feel deeply betrayed by the United States."

Retailers' decisions to pull products is bad news for American businesses, said Skuba.

"Less sales are better than no sales,'' he said. "Some segments of consumers are less price sensitive than others and may still be willing to pay more for their favorite brands if they can find them on the shelves. Brands invest in awareness and differentiation to build consumer loyalty, but that doesn't help if consumers can't even find them."