Do you want more booze? Liquor and beer might cost you more

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Beer and liquor may be recession-proof, but they’re certainly not tariff-proof.

If President-elect Donald Trump follows through with proposals to impose a 25% tariff on all items from Canada and Mexico, the result would be a stiff penalty on some of America’s favorite libations, not to mention the No. 1 beer brand in the nation : Modelo.

Some business owners have started stockpiling popular products – specifically tequila, which can be made only in Mexico – and taking other actions to help stave off potential price hikes.

However, industry leaders and analysts say consumers would still have to pay more in the end.

“A lot of those companies, especially the smaller ones, don’t have much choice except to pass those costs along,” said Dave Williams, president of Bump Williams Consulting, which provides consulting and analytics services to the alcoholic beverage industry.

He added: “The unfortunate reality is that would trickle down.”

The same is likely true for even the biggest companies in the business. Constellation Brands, which imports Modelo and Corona beer as well as Casa Noble tequila from Mexico, could see its costs leap 16% under Trump’s proposed tariff and would likely have to raise prices by about 4.5%, Chris Carey, a Wells Fargo equity analyst, wrote in a note issued Tuesday.

At this stage, the tariffs are technically still just talk, with plenty of caveats and scenarios strewn about.

But if large tariffs are levied against two of America’s top trading partners, it would be a blow to a US industry that’s still nursing its hangovers from recent trade wars, a pandemic, supply chain disruptions and a global battle against inflation, Williams said.

“That’s the whole point of negotiations like this is you need something to start the conversation or get the ball rolling,” he said. “The hope is that it just comes down to not the worst-case scenario but something that everyone can be better walking away from. But, at the same time, you do need to prepare and start thinking about what to do should this become a reality.”

Mexico Signals It Could Hit Back at U.S. With Tariffs of Its Own