Trump US tariff pledge threatens Canadian whisky, tequila - data

Another tariff war is starting to take shape, with two previously-unaffected spirits categories in the line of fire.

Having warned during the recent US election campaign of his preparedness to revisit tariff implementations, president-elect Donald Trump added more details of his intentions this week. Posting on his Truth Social platform, Trump said: “On January 20th, as one of my many first Executive Orders, I will sign all necessary documents to charge Mexico and Canada a 25% Tariff on ALL products coming into the United States, and its ridiculous Open Borders.”

In beverage alcohol, the move would impact Canadian whisky from the north and tequila from the south. At the same time, imports of Constellation Brands’ Mexican beer portfolio, which accounts for around 85% of the group’s total sales, would also be hit.

The development prompted a statement from trade association the Distilled Spirits Council of the United States (Discus), highlighting the effect tariffs in Trump’s first term have had on American whiskey exports. “Our industry has been weighed down by retaliatory tariffs as part of unrelated trade disputes since 2018, which crashed our exports harming thousands of distillers and their farmers across the US,” said CEO Chris Swonger yesterday. “We are now currently facing the threat of a devastating 50% tariff on American whiskey by the EU at the end of March 2025.”

Subsequently, Swonger expressed concern on the likelihood of levies in the opposite direction should Trump deliver on his warning when he assumes the presidency in January. “Under the United States-Mexico-Canada Agreement (USMCA), tequila and Canadian whisky are designated as distinctive products, similar to bourbon, where they can only be made in their country of origin,” he added. “Slapping a tariff on tequila and Canadian whisky will not boost American jobs simply because they cannot be produced in the US.”

Discus also released figures showing the value of both Canadian whisky and tequila exports to the US over the last decade. Due to it mature status, Canadian whisky has been in long-term decline since 2013, when exports totalled US$309.5m, according to the data. Over the following ten years, the category’s compound annual growth rate (CAGR) declined by 4.2%, totalling $202.5m in 2023.

Tequila, meanwhile, has been in stellar growth during the same period. Despite a year-on-year decline of just over 6.1% in 2023, the Mexican flagship spirits’ ten-year CAGR for exports to the US stands at 20%.

“The US spirits sector continues to experience a slowdown,” Swonger noted. “At the end of the day, tariffs on spirits products from our neighbours to the north and south are going to hurt US consumers and lead to job losses across the U.S. hospitality industry just as these businesses continue their long recovery from the pandemic.”

Canada and Mexico are not alone in this matter: Trump also said during the campaign that all imports into the US would be liable to a tariff of 10%, before raising the level to 20%.