Many buyers rushed their orders after Trump first postponed the measures by a month so they could get merchandise across the border before the levies came into force. Now that another deadline is approaching, business is drying up until the impact of the tariffs becomes clear, with some payments being delayed amid increased inventories, according to producers in Jalisco state.
With uncertainty rising, one seventh-generation tequila maker argued that prolonged threats could be even worse than the levies themselves. “Clients don’t want to commit right now and sitting on inventory is expensive,” Luis Fernando Camarena, 29, said by phone.
Trump sowed confusion this week about what tariffs would come into effect and when. After giving a series of contradictory answers about his trade policy plans for Canada and Mexico, as well as the European Union, the president confirmed Thursday that the US would impose 25% tariffs on its two neighbors on March 4 as planned, along with a 10% tax on Chinese imports.
“If tariffs are imposed we would see a negative impact, though markets would adjust with time,” Camarena said. “Further postponements could cause greater damage as they disrupt in-house operations and supply chains.”
His family sells more than two thirds of the agave-based liquor it produces in the US and their company, Camarena Tequila, is already forecasting a 20% drop in the first half of the year. The hit to the broader tequila sector could be even harder, as more than 80% of Mexico’s production heads north across the border.While data for February — when Trump’s tariffs were on hold — isn’t available yet, tequila makers shipped 32 million liters to the US in January, according to the industry regulator. That’s up nearly 35% from a year earlier and represents a jump of 25% from December as buyers rushed to purchase ahead of the president’s initial Feb. 4 implementation date.Jose Cuervo maker Becle SAB, meanwhile, warned Thursday that it could face an $80 million hit if the US imposes tariffs, though it has been preparing for that scenario. “We have proactively increased inventories in the US through anticipated inter-company shipments from Mexico and Canada,” Chief Financial Officer Rodrigo de la Maza said during an earnings call.
Mexico has had a monopoly on tequila production since the mid-1990s when it was given so-called denomination of origin status by the EU and then, later, by its North American free-trade partners, the US and Canada. But choosing its northern neighbor as its prime market — due to both proximity and it being home to millions of Mexicans who already drink it — made policy decisions in Washington a “make it or break it” issue for the industry, Monex analyst Roberto Solano said in an interview.
“It’s a pivotal moment for tequila,” said Vas Art, head of marketing at OhBev, a Vancouver-based agency focused on alcoholic beverages. “We’re seeing a frenzy of proactive moves. Brands are front-loading like crazy,” stockpiling in the US and in some cases even importing stainless steel tanks of the liquor for it to be bottled stateside.
Even with the March 4 deadline now seemingly set in stone, Salvador Rosales is hopeful for a reprieve. The 39-year-old grandson of Tequila Cascahuin’s founder, he said that while production continues the uncertainty has made it nearly impossible to plan ahead.
“Do I launch that marketing campaign? Should we hire more US sellers? Those are questions tequila makers cannot answer at this moment,” Rosales said by phone. “US distributors are falling behind in payments,” he added. “I don’t know if they are feeling pressure from high inventories, but it’s something that definitely worries us.”
Both he and Camarena agreed the only way tequila makers will be able to survive the imposition of tariffs is to pass part of the costs onto their customers.
Pain could also be felt elsewhere in Mexico’s beverage and tobacco industry. The country is coming off a record year for foreign investment in 2024, with the sector attracting the second most money from abroad after transportation equipment.
While the alcohol industry has endured various pressures — from inflation to a decline in sales driven by younger generations drinking less — Monex’s Solano said uncertainty around tariffs is set to cause even greater damage. The beer segment is better positioned to resist trade disruptions, though separate sectoral levies on packaging materials like aluminum could also hit margins. Spirits and wine, meanwhile, are in the weakest position.
Mexico’s little-known wine industry had also been picking up steam recently. In 2023, nearly four in 10 bottles opened by hospitality businesses were produced domestically, an eight-fold increas from 2020, according to Salomon Abedrop, head of the country’s wine council.
Though the sector only exports 5% of what it produces, executives were starting to look north for expansion as curious US travelers discovered Mexican wine through its tourism sector. But those plans will now have to wait.
“I believe Trump’s strategy is to have a loaded gun pointed at Mexico,” Abedrop said, “which will cause uncertainty and disruptions for the next four years.”
