USA: America's favorite beer could be more expensive next year

America's favorite beer could be more expensive next year if Donald Trump implements his threatened trade tariffs, MSN reported on November 28.

The President-elect has promised to bring in tariffs of 25 percent on America's two largest trading partners, Mexico and Canada, on day one of his presidency.

Modelo Especial Lager, which has overtaken Bud Light as the top selling beer in the US, is imported from Mexico by parent company Constellation Brands.

If the entire cost of the tariff is passed on to consumers, then a six-pack of Modelo would rise from around $11 to $13.75, USA Today reported.

Constellation Brands, which also owns Corona beer, saw its stock fall three percent off the back of Trump's tariff announcement.

And it is not just beer that could go up in price if Trump follows through on his proposals.

All alcoholic beverages imported from Mexico and Canada would potentially have higher retail prices, Bump Williams, whose consulting firm services the beverage industry, told USA Today.

This includes Mexican beer, but also tequila and Canadian whisky.

A 750-milliliter bottle of tequila, which is usually priced at between $25 and $50, could increase to between $31.25 and 62.50, according to the outlet.

A 750ml bottle of Canadian whisky could increase from $40 to $50.

However, analyst Bill Kirk has estimated that Modelo-maker Constellation may only have to raise its beer prices by 12 percent to offset the proposed tariff and keep profits flat.

Kirk also argued in a note to investors at Roth MKM that Trump previously threatened tariffs on Mexico in 2019, but they never materialized as the threat opened up trade negotiations.

Kirk said there is also a possible scenario where Constellation, and therefore its beers, are given exemption under any tariffs, Market Watch reported.

This is because the US Justice Department requires Constellation to produce its brands exclusively in Mexico, a policy resulting from the previous sale of Modelo in 2013.

'We believe it would be illogical to force a tariff on the same U.S. company - largest U.S. brewer - [for which] you obligate the location of production,' Kirk told investors.

As the US's top beer brewer the company's success is linked to an estimated 2.37 million jobs in agriculture, distribution and retail.

As well as potentially increasing the cost of some alcoholic drinks, Trump's proposed tariffs could also push up the price of many everyday goods, experts have warned.

'Tariffs will push up costs for American companies and those costs will eventually find their way through to higher prices for shoppers,' retail expert Neil Saunders told DailyMail.com.

'If tariffs are broad brush, then there will be an impact on a wide range of categories,' Saunders, of GlobalData, explained.

Mexico is the US's biggest trading partner, with $475 billion in goods being imported from the country last year, The Washington Post reported.

The majority of these imports were manufactured items such as cars, computers and household appliances, which could go up in price under the proposed tariffs.

Mexico is also a significant exporters of agricultural goods to the US.

Potential tariffs could also make everyday food items such as fruit, vegetables, meat and dairy more expensive.

Earlier this week, Mexican President Claudia Sheinbaum said her country could retaliate with tariffs of its own.

Saunders, from GlobalData, added that retailers may be able to adapt to tariffs - if such proposals are actually implemented.

'Over time, retailers and manufacturers will shift where they make things – but making these changes can't be done overnight,' he told DailyMail.com.

'The one point that needs to be remembered is that President Trump uses the threat of tariffs as a negotiating tactic.

'So, there is no guarantee that long-term tariff policy will be as harsh as the rhetoric. Even so, retailers need to prepare for the worst.'

Trump made the trade threats on his Truth Social platform, claiming tariffs would be used to stop the flow of drugs and immigrants into the United States.

'This Tariff will remain in effect until such time as Drugs, in particular Fentanyl, and all Illegal Aliens stop this Invasion of our Country!' he said of Mexico and Canada.

29 November, 2024