Tariffs might not happen but tequila is already paying the price

Emma Rumney

Mon, Mar 17, 2025, 2:04 AM 4 min read

By Emma Rumney

LONDON (Reuters) - Even if U.S. President Donald Trump's tariffs connected Mexico are not imposed, the threats and uncertainty caused by connected and off-again levies person already outgo the tequila assemblage wealth and could thrust a impermanent slowdown successful sales, producers, investors and analysts told Reuters.

The 25% tariffs, initially owed to beryllium applied from February and concisely successful spot connected March 4 earlier being suspended connected some occasions, threatened billions of dollars of imports from immense producers similar Diageo and Becle alone.

They prompted businesses and consumers to stockpile tequila, which tin lone beryllium made successful Mexico, frost enlargement plans and divert resources elsewhere.

Some producers, restaurants and drinkers accumulated hefty tequila stock, sometimes of up to six months - a stake which volition wage disconnected if tariffs are imposed. But producers accidental this besides has a cost, hurting the assemblage adjacent if the tariffs are rolled back.

"No substance what happens ... a terms has been paid," said Mike Novy, main enforcement serviceman of Calabasas Beverage Company, which operates the tequila marque founded by Kendall Jenner, 818 Tequila.

The institution asked its distillery to enactment level out, with workers connected overtime done the holidays successful December, successful bid to beryllium capable to vessel astir six months' worthy of merchandise to the U.S. up of tariffs, Novy said, adding this outgo up to $2 million, portion retention fees would adhd astir 10% to its costs.

The institution had besides enactment planned hiring and merchandise launches connected hold, helium said, costing opportunities, arsenic well.

Brian Rosen, laminitis of InvestBev, an capitalist that partners with early-stage spirits brands to assistance them grow, said tequila companies successful his portfolio had besides built up six months' supply, and are paying up to $20,000 per shipping instrumentality for storage.

Such retention costs unsocial could propulsion immoderate brands to rise prices - different anticipated effect of tariffs that could present hap adjacent if they are not applied, helium said.

The interaction connected tequila - a agleam spot for the U.S. spirits manufacture amid a crisp downturn successful broader spirits income - shows the collateral harm of Trump's effort to rip up and remake planetary commercialized relationships successful favour of the United States.

It comes astatine a clip erstwhile businesses reliant connected tequila, from apical liquor shaper Diageo, whose Don Julio tequila marque is driving performance, to tiny restaurants whose margarita income assistance support them afloat, are struggling with prolonged precocious involvement rates and inflation.

Diageo and Becle, the world's largest tequila producer, antecedently told investors they front-loaded inventory up of tariffs. Diageo declined to comment, and Becle did not respond to questions.