Trump Promises to Impose Highest Tariffs Since The Great Depression, Spelling Disaster for Tequila and Canadian Whisky

Donald Trump expressed on Truth Social that he would impose a 25% tariff on Mexico and Canada, dealing a hefty blow to tequila and Canadian whisky. (Photo: Rebecca Blackwell/AP Images)

On Monday, President-elect Donald Trump said in a Truth Social post that he intends to impose a 25% tariff on goods coming from Mexico and Canada as soon as he takes office in January. These tariffs will extend to all goods, including tequila and Canadian whisky.

Trump expressed on Truth Social that his reasoning was to stop “migrants and fentanyl from coming into the U.S.,” according to USA Today.

“This Tariff will remain in effect until such time as Drugs, in particular Fentanyl, and all Illegal Aliens stop this Invasion of our Country!” Trump wrote on the platform. “Both Mexico and Canada have the absolute right and power to easily solve this long simmering problem. We hereby demand that they use this power, and until such time that they do, it is time for them to pay a very big price!”

President Donald Trump additionally wrote that he would bump up the tariffs on Chinese goods by an initial 10%.

These potential tariffs mark a stark departure from Trump’s first term, where he made sure Mexico and Canada would be able to avoid tariffs during a renegotiation of a free-trade agreement between the countries.

Though the president explained Mexico and Canada would “pay a very big price,” economists beg to differ. USA Today defines tariffs as taxes imposed on imports from other countries, and businesses that purchase these imported goods pay the extra fee.

Yet with these extra fees, it’s the consumers who end up footing the bill, and The Spirits Business reported that such would be the case regarding alcoholic beverages like whisky and tequila.

“They’ll be very clear with any administration and any government that if you increase tariffs on our products, we are going to pass it on to your citizens. This is not to hit us,” Barclays Investment Bank Head of European Beverages Research at Laurence Whyatt said, according to The Spirits Business. “And in the same way, if any government were to lower tariffs, they would pass it on to their citizens.”

The nonpartisan tax policy nonprofit organization, the Tax Foundation, expressed that tariffs often “negatively impact economic output and income.”

Positive benefits could involve shifting business to domestic manufacturing driving drinkers back to more “American” spirits, like bourbon and beer, but some of these American businesses rely on imports to manufacture goods.

The craft beer industry is a great example in that a lot of brewers rely on aluminum equipment imported from China. An increase in tariffs would drive up the prices of this necessary equipment, thus trickling down to consumers.

How a 25% Tariff Would Negatively Impact Tequila and Whisky

USA Today reports that Trump’s intention to implement 25% tariffs would be the highest tariff imposed against a country since The Great Depression.

In October, Vice President Kamala Harris warned younger voters about a potential “Trump Tequila Tax” should he win the election, yet the tariff was projected to be a lower number at 20%.

Regardless, such a tariff could have a catastrophic impact on the tequila industry. The Spirits Business reported that the United States imported over 321 liters of tequila in 2023. It was the world’s largest importer of agave spirits.

The outlet reported that Swiss bank UBS analysts predicted that such tariffs between 10 and 20% would drive Diageo’s profits down 4% and that a massive 94% of Tequila 1800’s sales would be hit with tariffs.

Such tariffs would drive the price of Tequila 1800 up 3%-5%, and the companies would expect consumers to cover the cost. During an interview with Radio Formula, Mexico’s Economy Minister Marcelo Ebrard expressed how the country would react to a 25% tariff.

“If you put 25% tariffs on me, I have to react with tariffs,” Ebrard expressed, according to The Spirits Business. “If you apply tariffs, we’ll have to apply tariffs. And what does that bring you? A gigantic cost for the North American economy.”