President Donald Trump announced plans to levy 25% tariffs on goods imported from Mexico and Canada, as well as 10% additional tariffs on China over the weekend.
However, duties on goods imported from Mexico received a one-month reprieve on Monday following a border security deal.
The tariffs, set to go into effect Tuesday, set off a trade war with at least one of the United States’ North American trade partners and China, who each promised retaliatory duties on U.S. goods.
Canadian Prime Minister Justin Trudeau issued 25% tariffs on $155 billion CAD ($107 billion USD) of U.S. goods, with $30 billion CAD set to go into effect Tuesday and the rest to follow in three weeks. Beer, wine and bourbon are included in the tariffs, along with fruits and juices such as orange juice along with other consumer goods.
Trump is slated to speak with Trudeau today.
Meanwhile, Mexican President Claudia Sheinbaum wrote in a Twitter/X post that the U.S. had agreed to pause tariffs for one month following negotiations Monday.
Sheinbaum added that Mexico will “reinforce” the border with 10,000 National Guard members “to prevent drug trafficking” into the U.S., and the U.S. pledged to help “prevent the trafficking of high-powered weapons to Mexico.”
On Sunday, Trump told reporters that U.S. consumers may experience “short term, some, a little pain, and people understand that, but, long term, the United States has been ripped off by virtually every country in the world.”
Additional tariffs may be in the offing, as Trump has threatened duties on goods from the European Union.
The tariffs likely mean increased prices for U.S. consumers. Tariffs are levied on importers, who typically pass those costs to retailers, who then raise the price of goods to consumers.
Also over the weekend, Ontario Premier Doug Ford ordered the province’s Liquor Control Board of Ontario (LCBO) to remove U.S. produced liquor from its shelves, Reuters reported.
“Every year, LCBO sells nearly $1 billion worth of American wine, beer, spirits and seltzers. Not anymore,” Ford wrote on Twitter/X. “Starting Tuesday, we’re removing American products from LCBO shelves.
“As the only wholesaler of alcohol in the province, LCBO will also remove American products from its catalogue so other Ontario-based restaurants and retailers can’t order or restock U.S. products,” he continued. “There’s never been a better time to choose an amazing Ontario-made or Canadian-made product. As always, please drink responsibly.”
On Monday, Ford wrote that Ontario would ban U.S. companies from provincial contracts until the tariffs are removed.
British Columbia Premier David Eby also ordered the B.C. Liquor Distribution Branch to stop buying U.S. liquor from “red states” and remove offerings from store shelves, according to the CBC.
Within the beer category, all eyes are on Constellation Brands and its Mexican import brands Corona, Modelo, Pacifico and Victoria. Due to a consent decree, the company is required to import its products from Mexico.
Following Trump’s inauguration, Bernstein analyst Nadine Sarwat wrote that Constellation was expected to “be the most impacted by Trump tariffs on Mexican imports, with a 33% hit to group operating income with no incremental pricing, or a 23% hit to group operating income with 5% incremental pricing.”
Tequila maker Cuervo (20% to 30% hit depending on pricing) and spirits producer Brown-Forman (1% hit) are also brands to watch. Although Bernstein noted Brown-Forman could be slapped with a 10% hit should retaliatory tariffs from the EU come into play.
RBC Capital analyst Nik Modi wrote today that Constellation’s share valuation is “already pricing in impacts from tariffs (coupled with cyclical topline concerns) and have overrated to the downside.” Modi added that RBC views the “the longer term risk reward favorably,” with the firm rating Constellation an “outperform and are buyers on weakness.”
As of press time, Constellation’s stock (STZ) was trading around $175. The stock closed Friday at $180.80 and has trailed its 52-week high of $274.87.
Per CNN, “fear” is driving the U.S. stock market, with the Dow, S&P 500 and NASDAQ all in the red as of press time.