US-Canada trade war: Trump’s ban on Canadian alcoholic beverages takes effect, but bulk whisky is exempt. Here’s why

Trade tensions continue to deepen between the United States and Canada after US President Donald Trump's ban on Canadian alcoholic beverages came into effect on Tuesday (local time). The unprecedented move, which is set to affect $800 million worth of Canadian alcohol that Washington imported last year, has exempted whisky and liqueurs, creating a notable loophole for producers, CNN reported.Why is bulk whisky exempted from the ban?

What we knowWhisky and liqueurs, two of Ottawa's top alcoholic beverage exports to Washington, are exempt from the ban when shipped in containers larger than four litres. These bulk shipments are typically imported for further processing or bottling in the US, allowing them to continue entering the country without the ban or tariffs.However, making the switch would require businesses to either have suitable containers available or source new ones, followed by repackaging the whisky into the smaller bottles typically sold in liquor stores.

These additional steps could increase operating costs, which may eventually be passed on to consumers.US-Canada trade war deepensThe move marks the latest salvo in a tit-for-tat trading war between the once long-standing trading partners, which already includes sky-high tariffs and a ban on American alcoholic beverages in Ontario and other Canadian provinces.Trump relies on 1930 Act to ban Canadian boozeTo enforce the ban on Canadian alcohol, US President Donald Trump is invoking Section 338 of the Smoot-Hawley Tariff Act of 1930, a controversial trade law blamed for worsening the Great Depression.

According to the statute, the 1930 Act permits the US President to levy tariffs of up to 50 per cent or, in some cases, ban several imports when another country discriminates against "commerce of the United States." The report, citing experts, noted that the rapidly changing trade dynamics between the two long-standing allies could lead to further shifts. Hours before the ban took effect, the US President said he was confident Washington would benefit and anticipated that Ottawa would soon approach the US with a deal.Trump expects Carney to approach with a dealAddressing reporters on Monday (local time), Trump said, "They want to have a deal with us; they call us all the time.

The problem is that they’ve treated the United States very unfairly." He added, "Over the next three or four weeks, they’re going to come to us, and they’re going to say, ‘We’re going to get rid of all the tariffs." He made these remarks at a time when Canadian Prime Minister Mark Carney has not made any statement regarding it.However, it remains to be seen whether Canadian Prime Minister Mark Carney will approach Washington with a deal to ease the escalating trade tensions between the two countries.