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Beer lovers could soon see higher prices at the checkout counter if President-elect Donald Trump’s proposed tariff plan moves forward.
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Constellation Brands (STZ-0.06%), the company behind popular brews like Modelo and Corona, is raising concerns over the potential impact of a 25% tariff on Mexican imports. If implemented, the tariff could increase the company’s costs by about 16%, Wells Fargo (WFC-2.13%) analyst Chris Carey said in a research note.
During Constellation’s Oct. 3 earnings call, CFO Garth Hankinson acknowledged the challenges posed by global economic and geopolitical uncertainties. “We’re closely monitoring any signs of pressure on the consumer,” he said, adding that the company plans to reinvest any cost savings into high-return marketing campaigns.
Hankinson also indicated Constellation may adjust its pricing strategy or packaging to maintain its appeal with consumers. This could include offering cheaper options, product bundles, or premium offerings for those willing to pay more. However, with beer accounting for 86% of the company’s sales, the proposed tariff could have a significant impact on Constellation’s operations, which are closely tied to Mexico. That could in turn affect its relationship with U.S. consumers.
The situation is further complicated byTrump’s broader trade policy, which also targets imports from Canada and China. Together, these countries account for over 40% of all goods imported into the U.S., making the potential for higher prices widespread. The cost of everyday items including apparel and electronics could be affected.
It remains unclear whether the tariff proposals will ease through negotiations or escalate further due to potential trade conflicts.
Constellation isn’t alone in facing this pressure. Retail giants like AutoZone (AZO-0.75%), Best Buy (BBY-1.12%), Walmart (WMT+0.23%), Home Depot (HD-0.89%), and Lowe’s (LOW-1.20%) have all warned that consumers will likely feel the impact of higher prices as companies pass on those increased costs.
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