Update: As of Thursday afternoon, President Trump has paused tariffs, again, on imports coming from Mexico and Canada that are covered by the United States-Mexico-Canada Agreement (USMCA) until April 2.
President Donald Trump launched a trade war today with the United States’ North American trade partners, Canada and Mexico, implementing 25% tariffs on goods imported from each country, while levying a 10% duty on Canadian energy products.
Trump also doubled existing duties on goods from China to 20%. China responded with 15% tariffs on farm products from the U.S, such as chicken, pork, soy, beef, wheat corn and cotton, set to go into effect March 10, according to the Associated Press.
Canadian Prime Minister Justin Trudeau announced Canada’s own retaliatory tariffs, including a 25% duty on $155 billion in American goods, with tariffs on $30 billion going into effect immediately and the remainder following in three weeks, per CNN.
Among Trump’s reasoning for the tariffs on Mexico and Canada is his belief that neither nation is doing enough to curb the influx of fentanyl to the U.S., which has been largely debunked.
Trudeau said “there is absolutely no justification or need whatsoever for these tariffs today” and called Trump’s fentanyl excuse “completely bogus.”
U.S. Customs and Border Protection statistics for 2024 showed that of the 21,889 pounds of fentanyl seized last year, around 0.2% (43 pounds) came from the Canadian border, while around 96.6% (21,148 pounds) came from the Mexican border.
“I want to speak first directly to the American people,” Trudeau said. “We don’t want this. We want to work with you as a friend and ally. We don’t want to see you hurt either. But your government has chosen to do this to you.
“As of this morning, markets are down and inflation is set to rise dramatically all across your country,” he continued. “Your government has chosen to put American jobs at risk at the thousands of workplaces that succeed because of materials from Canada or because of consumers in Canada, or both. They’ve chosen to raise costs for American consumers on everyday essentials.”
In trying to find reasoning for the tariffs, Trudeau alleged Trump wants “a total collapse of the Canadian economy because that will make it easier to annex us.”
“First of all, that’s never going to happen,” he said. “We will never be the 51st state, but yeah, he can do damage to the Canadian economy and he started this morning. But he’s going to rapidly figure out, as American families are going to find out, that it’s going to hurt people on both sides of the border.”
Meanwhile, Mexico is expected to announce retaliatory tariffs on Sunday.
“There is no motive or reason, nor justification that supports this decision that will affect our people and our nations,” Mexico President Claudia Sheinbaum said.
Within the beer industry, all eyes have now turned to Constellation Brands, whose Mexican import brands Modelo, Corona, Pacific and Victoria have been growth drivers within the beer category. Due to a consent decree, the company is required to import its products from Mexico.
During Constellation’s Gold Network Summit with its distributor partners this morning, Constellation beer division president and EVP Jim Sabia addressed the news.
“Consistent with what we have said before, we will continue to evaluate the levers at our disposal around inventory, cost and pricing,” he said. “These are going to have implications for our suppliers, distributors, retailers and our consumers that also need to be factored in. So please don’t let this take away from any energy you felt last night and the excitement of what you’re going to see and hear today from our teams and the evolution of our successful playbook.”
Constellation stock (STZ) was trading below $172 as of press time, after opening at $174.24 Tuesday.
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. Bernstein noted Brown-Forman could be slapped with a 10% hit, should retaliatory tariffs from the EU come into play.
The Brewers Association (BA) noted that its craft brewery members could see impacts on barley, aluminum, oil and energy costs and reciprocal tariffs on beverage-alcohol exports to Canada and Mexico. The trade group encouraged members to contact their supplier partners.
Additional tariffs on aluminum and steel are expected to go into effect on March 12, the BA added.
The Dow, S&P 500 and NASDAQ are all down in trading today. CNN’s Fear & Greed tracker of the markets lists “extreme fear” as driving market trends.
Andrew Wilson, deputy secretary-general of the International Chamber of Commerce, told the Wall Street Journal that the trade war could push the global economy into another Great Depression.
“Our deep concern is that this could be the start of a downward spiral that puts us in 1930s trade-war territory,” Wilson told the outlet.
“Right now it’s a coin-flip,” he continued. “It comes down to whether the U.S. administration is willing to rethink the utility of tariffs.”
Trump will address Congress for the first time tonight at 8 p.m. ET.