As President-elect Donald Trump threatens to impose a 25% tariff on goods from Mexico and Canada if they don’t stop the flow of migrants and deadly opioid fentanyl over their borders, American consumers are bracing for the impact. Economists warn that such penalties would cause real pain not just to those countries but also to U.S. consumers who will have to bear the cost of higher prices.
The United States’ top two trade partners, Mexico and Canada, manufacture a vast array of products used by Americans every day. A 25% tariff could add $3,000 to the price tag of a new Ford or GM truck, made in Mexico, which accounts for 88% of pickups sold in America. Fresh fruit and vegetables imported from Mexico would also see significant price increases.
The beer industry is not immune to these tariffs either. Most of the imported beer consumed by Americans comes from Mexico, with about 18% of all U.S. beer imports coming from this country. A Mexican beer like Modelo Especial became the top-selling brew in the United States last year, and a 25% tariff could push up its price between 4-12%.
However, American farmers who export malted barley to Mexico may also feel the pinch if Mexican beer sales decline due to higher prices. The U.S. government replaced the North American Free Trade Agreement (NAFTA) with the United States-Mexico-Canada Agreement (USMCA) in 2020, but Trump’s proposed tariffs could potentially destroy this treaty.
While companies like Constellation Brands, which owns Mexican breweries producing popular beers, have expressed confidence that they can navigate these trade tensions, others may not be as fortunate. The impact of a U.S.-Mexico tariff on the food and beverage industry will likely be far-reaching, affecting many Americans who rely on affordable prices for their everyday essentials.
Source: WA Post
