Crown Royal, the country’s bestselling whisky beloved by Americans, could keep flowing south for free thanks to its bottling operations in the U.S., which allow it to circumvent U.S. import bans, some experts said.
While the import ban kicked in Tuesday for Canadian beer, wine and spirits, there’s a big catch: whisky — except packaged rye whisky — and liqueurs shipped in bulk or in containers of four litres or more, among other gaps in the ban, are not prohibited from entering the U.S.
It is one of the “most prominent exemptions” because whisky and liqueurs in those large containers are also exempt from the 50 per cent tariffs on roughly $28 billion worth of Canadian goods that took effect Aug. 22, said Robert Glasgow, a partner at KPMG Law, who could not comment on any specific brand.
“It’s likely that the U.S. puts this exemption in place to not harm the companies that have bottling facilities in the United States, that would otherwise be cut off from their supply,” Glasgow said.
Which Canadian whiskies can still be sold in America?
The carve-outs could favour some multinational companies that age and distil whisky in Canada but package it south of the border, such as Crown Royal, owned by Diageo in the U.K., said beer and spirits author Stephen Beaumont.
In February, Diageo shuttered its longtime bottling facility in Amherstburg, Ont., after decades of operations, shifting some of the bottling operations closer to its U.S. customers.
“I don’t think it’s too cynical to suggest that this exemption on container size was actually put in place specifically for Diageo,” said Beaumont. “Crown Royal is the most popular whisky in Texas. It outsells every American whiskey in Texas.”
“If it were suddenly removed from shelves, I think there would be backlash,” he said.
Diageo did not respond to questions about whether its production and bottling setup would shield it from the U.S. import ban. The British company said earlier that the shift in bottling production is part of a broader effort to improve its North American supply chain.
Crown Royal products sold to Americans are bottled across different facilities south of the border, and those sold in Canada and destined for the international market outside the U.S. are bottled on Canadian soil.
Canadian whisky author Blair Phillips said that most of the top 11 Canadian whiskies sold in the U.S. are owned by international companies which likely bottle their products south of the border, allowing them to sidestep the alcohol ban.
Examples include Crown Royal, Black Velvet, owned by Kentucky-based Heaven Hill, and Canadian Mist, owned by Sazerac in Louisiana, Phillips said.
Heaven Hill and Sazerac did not respond to the Star’s request for comments.
Canada exported $1.4 billion worth of alcoholic beverages to the U.S. in 2024, $1.1 billion of which is expected to be banned, said Glasgow.
But Glasgow said setting up bottling operations in the U.S. is no easy workaround unless the brand already has production facilities there. It requires significant capital investment and potentially retooling production lines to make containers suitable for bulk shipments.
It will likely deter smaller distilleries that sell most of their products at home from making the move, he said.
“The question starts to become: How long do you think the ban is going to remain in place?” Glasgow said. “Do you think that this is a ban that’s going to last for the rest of the Trump presidency?”
Why the U.S. is protecting its bottling profits
Barry Appleton, a veteran international trade lawyer, said the U.S. import ban leaves room for bulk shipments because Americans make more money from bottling and marketing than from the alcohol itself.
“So they don’t want to cut Canada off,” Appleton said. “They just want to cut off Canada’s profits.”
A spokesperson for U.S. Customs and Border Protection said in a statement that U.S. residents aged 21 or older may bring back one litre of alcohol for personal use duty-free when returning from abroad, including from Canada.
Amounts above the duty-free limit are subject to CBP review and may face applicable duties, including the 50 per cent tariffs on Canadian alcohol imposed prior to the import ban.
