Trade tensions cut U.S. wine exports 37%, erasing $460 million in revenue

U.S. wine exports fell sharply in the 12 months that ended in January, as trade tensions with Canada and China cut deeply into overseas sales and wiped out $460 million in revenue for American producers, according to a report from the agricultural research service Terrain based on U.S. International Trade Commission data.

The report said export volume dropped 22% over that period, while export value fell 37%. The biggest blow came from Canada, the largest foreign buyer of American wine, where shipments from the United States collapsed after Canadian provinces moved in February 2025 to block or restrict American alcohol in response to U.S. tariffs and sovereignty threats, according to the report.

Terrain said exports to Canada fell 84% in value and 75% in volume in the 12 months ending in January. Sales to China, which had been the third-largest export market for U.S. wine by value in 2024, also dropped steeply. The report said exports to China fell 73% in value and 58% in volume over the same 12-month period.

The decline adds to a longer slide in U.S. wine exports that had already been underway for much of the past decade. Terrain said exports had been weakening because of structural industry factors before the latest tariff fight, but the measures imposed by the Trump administration in February 2025 and retaliatory steps by other countries made the downturn much worse.

Even so, the report found that the damage outside Canada and China was more limited during the first year of the tariff dispute. Excluding those two markets, U.S. wine exports were down 2% in value and 2% in volume in the 12 months ending in January. Terrain said stronger sales to Japan and South Korea helped offset part of the loss. Before the trade conflict, those two countries were the fourth- and fifth-largest foreign markets for American wine by value.

The pace of decline also slowed later in the year, although from a weak base. In the six months ending in July, U.S. wine exports fell 10% in value and 12% in volume from the same period a year earlier, the report said. In the final three months of that period, exports were down 2% in value and 10% in volume year over year.

Terrain said much of that improvement reflected a stabilization in Canadian shipments rather than a broad recovery in global demand. In the six months ending in July, exports to Canada fell 1% in value and 14% in volume from a year earlier. That comparison, however, came against an unusually weak period in 2025, after provincial restrictions had already slashed trade.

The short-term rebound in Canada looked stronger in the three months ending in July. Terrain said shipments to Canada rose 377% in value and 36% in volume from the same period a year earlier. But the report stressed that the gains were measured against the lowest point of the downturn. Compared with the same three-month period in 2024, exports to Canada were still down 80% in value and 71% in volume.

While Canada stopped getting worse at the same pace, the report said U.S. wine exports to the rest of the world weakened further in 2026. In the six months ending in July, exports outside Canada fell 11% in value and 12% in volume from the same period in 2025. Terrain attributed that deterioration to a mix of political backlash against U.S. trade policy and broader economic strain linked to energy supply disruptions tied to the conflict in Iran.

Chris Bitter, Terrain’s senior wine and grape analyst, said the near-term outlook for exporters remains weak because the trade dispute with Canada has not eased and may deepen. The report said the United States had set September 29, 2026, as the effective date for new tariffs on a range of Canadian products. Canada responded with tariffs on a variety of American goods, though wine was not included in that round of retaliation.

Even without a direct new Canadian tariff on most U.S. wine shipments, Terrain said provincial restrictions on American alcohol are unlikely to be lifted soon. Full or partial bans remain in place across Canada except in Alberta and Saskatchewan, which lifted their bans in June 2025. Saskatchewan later imposed a 50% tariff on U.S. wine effective September 8, though the report said the province accounts for only a small share of Canadian wine sales.

That means the Canadian market, once the most important destination for U.S. wine exports, is likely to remain far below earlier levels for the foreseeable future, according to the report. Terrain also said prospects in other major export markets do not appear much stronger. It pointed to persistent inflation pressures, muted global economic growth and continued pressure on consumer spending as reasons demand for imported wine, including American wine, may stay soft.

For U.S. wineries and grape growers, the export slump matters beyond the headline trade numbers. Overseas markets are an important sales outlet for many producers, and weaker shipments abroad reduce demand across the supply chain. Bitter said wineries and growers should not expect export markets to provide a meaningful boost to sales or grape demand in the near term, even if exports eventually recover some lost ground after trade tensions ease.