The price of number one import Corona and other fast-growing Mexican beers will likely increase as President Donald Trump announced on yesterday that he will impose a stiff tariff on imported goods from Mexico starting June 10th until “such time as illegal migrants coming through Mexico” stop.
The proposed tariff, which will start at 5 percent of the import value and increase by 5 percent each month until it reaches 25 percent, will constitute a $12.5 million cost increase to beer industry importers during the month of June alone, and that cost will reach $374 million by the end of 2019. If the tariff remains at 25 percent, the cost to the beer industry will be $984 million per year.
Shares of Constellation Brands, importer of Corono and Modelo, dropped 5.8% today, the biggest one-day loss since Jan. 9th.
“The Beer Institute and its members urge President Trump and his administration to reconsider imposing another tax on the beer industry,” said Jim McGreevy, Beer Institute President and CEO in a press release.
“The beer industry is a thriving economic engine for America. Imposing a tax – and tariffs are taxes – on the largest import country of the beer industry would harm the 2.1 million Americans who owe their livelihoods to beer. Whether it be the truck driver, farmer, distributor, local retailer or favorite tavern, every community in America will be affected by this decision.
“The last thing we need is more hardship imposed on the beer industry and American beer drinkers.”
By the end of the year, America will have imported more than 360 million cases of Mexican beer. Most Mexican beer sold in this country is made from barley and hops grown in the United States. Beer accounted for more than 1 percent of Mexican goods imported into the United States last year – that’s $3.6 billion out of $346.5 billion.