Provincial rules around alcohol and the federal government's "Buy Canadian" policy have been flagged in a new report citing several trade irritants between Canada and the U.S.
The annual document prepared by the Office of the United States Trade Representative said market access barriers imposed by provincial liquor control boards "greatly hamper" exports of U.S. wine, beer and spirits to Canada.
Several Canadian provinces pulled American booze from shelves last year after U.S. President Donald Trump imposed tariffs and the document said the U.S. wants its alcohol to "immediately and permanently" return to all markets.
The document also raised concerns about the federal government's "Buy Canadian" procurement policy that aims to ensure Canadian products and workers are prioritized in contracts worth $25 million or more.
The report says U.S. companies have reported concerns about barriers in competing for contracts, including being forced to share information about their boards of directors or prove their Canadian subsidiary’s independence from a U.S. parent company.
Other issues listed in the report include delays with aircraft validation in Canada and high tariffs on U.S. dairy products.
The report said U.S. imports above quota levels are subject to "prohibitively high tariffs," including 245 per cent for cheese and 298 per cent for butter.
The report said U.S. goods exports to Canada totalled $336.5 billion in 2025, down almost four per cent from 2024. It also said Canada was the second largest U.S. goods export market last year.
Trade talks with Canada ahead of the mandatory review of the continental trade pact are lagging behind those with Mexico, United States Trade Representative Jamieson Greer said last month.
Greer told Fox Business that talks are moving ahead with his Mexican counterparts as the Trump administration negotiates changes to the Canada-U.S.-Mexico Agreement on trade, better known as CUSMA.
CUSMA — which was negotiated during the first Trump administration to replace the North American Free Trade Agreement — has shielded Canada and Mexico from the worst impacts of Trump’s tariffs. His worldwide 10 per cent duty does not apply to goods that comply with the trade agreement.
Canada is still being slammed by Trump's separate tariffs on industries like steel, aluminum, autos, lumber and cabinets.
The Trump administration has launched investigations under Section 301 of the Trade Act of 1974 of a long list of countries, including Canada, citing forced labour in supply chains. It was seen as a move to restore Trump's higher tariffs following a U.S Supreme Court ruling that reined in the president's tariff powers.
The report on foreign trade barriers said that while Canada has adopted measures intended to stop the importation of products produced using forced labour, "it does not appear that Canada is effectively enforcing its forced labor import prohibition, meaning goods made with forced labor may be able to enter and compete in Canada’s market."
"This issue may artificially suppress costs, including labor costs, which may give certain goods from and within Canada an unfair advantage," the report said.
Greer has complained that Canadians maintain barriers that make it difficult to hold bilateral trade talks, citing provincial bans on U.S. alcohol.
The relationship between Canada and the United States has been upended during the second Trump administration by the president's tariffs and threats of annexation.
CUSMA is up for review this year but the future of the continental trade agreement has been left in doubt by Trump. He has called CUSMA irrelevant and has said it may have served its purpose.
Greer also has floated the idea of abandoning the trade pact in favour of two separate bilateral agreements with America's closest neighbours.
The CUSMA review sets up a three-way choice for each country to make in July. They can renew the deal for another 16 years, withdraw from it or signal both non-renewal and non-withdrawal — which would trigger an annual review that could keep negotiations going for up to a decade.
Ottawa and Mexico City have both said the priority is to maintain an agreement between all three countries.
Canada-U.S. Trade Minister Dominic LeBlanc led a large trade mission to Mexico last month, and a Mexican trade delegation is set to travel to Canada in May.
Picture Courtesy: THE CANADIAN PRESS/Adrian Wyld
