There is no doubt beers imported from Mexico have enjoyed great success in recent years. Modelo Especial is now the top-selling beer in America. And collectively, import beer sales now surpass those of domestic premium beers.
But President-elect Donald Trump has shared on Truth Social that he intends to impose 25% tariffs on imports from Mexico and Canada immediately after he is sworn in on January 20, 2025, unless the the flow of migrants and drugs into the United States is stemmed by those countries. Whether those tariffs will ever be implemented is the subject of much debate, but if implemented, they would have far-reaching effects, including in the world of beer.
Increased Beer Prices
“Trump’s proposed tariffs, if put in place, would almost certainly raise the price of beer,” said Kate Bernot, lead analyst with Sightlines, a beverage alcohol insights platform, in an email interview. “Economists I’ve spoked to say they’d likely increase imported beer prices from affected countries at a rate roughly equal to that of the tariffs. Indirectly, they’re also likely to raise the price of beer in aggregate, even beer that’s made in the U.S. or countries not subject to tariffs. Why? Because if the most popular beers in the country are suddenly more expensive, it gives other producers license to increase prices as well.”
If domestic beer prices also increase, whether the tariffs will slow the growth of Mexican import beer is debatable. “Some drinkers may be price sensitive and will ‘trade down’ to less expensive beer, though that’s harder to do in a subcategory like Mexican imports where most drinkers have just a handful of major options to begin with,” said Bernot. “Additionally, Mexican imports are a premium beer option, indicating purchasers of those products can generally afford to spend a little extra.”
Beer Is Difficult To Domesticate
Some multinational beer brands are actually brewed domestically, which saves the breweries logistics costs and helps improve their carbon footprint. Could the proposed tariffs, if implemented, see the domestication of more import beer production?
“I’m skeptical of this,” said Bernot. “Moving this degree of production would require massive infrastructure and capital investment that I don’t think will be very palatable to beer companies.”
Increased Input Costs For Domestic Beer
Imported beer from Canada, Mexico and China will be subject to the tariffs, but imported materials necessary for making beer domestically will also be tariffed.
America imports a significant amount of malting barley from Canada for use in brewing. Also, “American beer is heavily dependent on aluminum imported from Canada,” said Bernot. “We simply don’t have the current capacity to produce the aluminum we use here. Two-thirds of American beer is packaged in aluminum, the majority of which comes from Canada.”
This could create further difficulty for an industry which has already been in decline.
That situation becomes even worse if the countries subject to the tariffs implement their own retaliatory tariffs. “Tariffs generally spark retaliatory action,” said Bernot. “Under the first Trump administration’s tariffs on certain European goods, we saw retaliatory tariffs that reduced certain US alcohol exports, namely spirits.”
“Beer as a whole may be less affected by the proposed tariffs than spirits or wine, which are more heavily import-dependent,” said Bernot. “However that’s not exactly something to celebrate. Beer prices will most certainly rise if tariffs are put in place, though the extent of this isn’t clear yet.”