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Mexican Tariffs Could Spike Corona And Modelo Beer Prices

Courtesy of ZeroHedge. View original post here.

Last Thursday, President Trump tweeted he would impose a 5% tariff on all goods coming from Mexico starting next Monday [June 10] "until such time as illegal migrants coming through Mexico, and into our Country, STOP." The tariff, if authorized by the White House, could make popular Mexican beer like Corona and Modelo, a whole lot more expensive for American consumers, reported CNBC.

A statement published by the White House said tariffs on Mexican imports would surge to 25% if the immigration crisis at the border is not resolved immediately.

A senior Mexican delegation will start high-level immigration talks on Monday in Washington to hopefully resolve the issue and thwart tariffs.

The announcement of possible duties gaped down Constellation Brands' stock 8% at one point last Friday.

According to Morgan Stanley, 75% of Constellation Brand's beer portfolio is "entirely imported" from Mexico. MS said in a research note to investors that a 5% tariff would cut 4% rom the company's bottom line. In the case of a 25% tariff rate, well, the company's profits would collapse by 19%.

Jim McGreevy, president and CEO of the Beer Institute, spoke with the Chicago Tribune who said tariffs on Mexico would harm the American trucking industry and farmers along the supply chain if Mexican brewers see a decline in activity. US farmers exported $209 million in barley to Mexican beer producers last year, McGreevy said.

It's likely that the importer on record will pass along the tariff in the form of higher prices to consumers. The beer industry has already been slapped with $349 million in additional costs thanks to President Trump's steel and aluminum tariffs.

Chicago-based MillerCoors, which imports the Mexican beer Sol, would be another beer to see possible price hikes if the tariffs went through next week. Heineken, which imports Dos Equis and Tecate, are more beers that could see price hikes. Anheuser Busch InBev, which imports Mexican beer Estrella Jalisco, could also see increased prices.

To "Make America Great Again," consumers will have to pay up for their favorite Mexican beers – at what point does the blue collar worker, living paycheck to paycheck, start noticing soaring prices thanks to President Trump's trade war?


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