As the political landscape shifts in the United States, the potential return of Donald Trump to the presidency raises significant concerns for the food and beverage industry, particularly regarding his proposed blanket tariffs on imports. The Consumer Brands Association highlighted the implications of such tariffs in a recent call with AgFunderNews, emphasizing that these economic policies could reshape the dynamics of food pricing and supply chains across the country.
Trump has floated a range of tariffs, suggesting a 10-20% rate on all goods entering the U.S. and a staggering 50-60% on imports from China. Analysts at TD Cowen have identified specific companies that could be most affected by these changes, with brands like Brown-Forman, the maker of Jack Daniel’s, and Constellation Brands, known for its Corona beer, facing significant challenges. In 2018, the European Union imposed a 25% retaliatory tariff on American whiskey due to U.S. tariffs on steel and aluminum. Although these tariffs were suspended, a Trump victory could lead to their reinstatement, potentially doubling the cost of American whiskey in Europe. This would likely prompt Brown-Forman to pass some of the increased costs onto consumers, thereby impacting sales volumes.
Constellation Brands, which brews its beer exclusively in Mexico and is currently constructing a new brewery in Veracruz, stands to face serious logistical and financial hurdles if tariffs are applied to Mexican imports. The company relies on sourcing corn and barley from U.S. farmers, transporting these raw materials to its Mexican facilities, and then shipping the finished products back to the U.S. A tariff on these goods could disrupt this carefully orchestrated supply chain, leading to increased costs and potentially higher prices for consumers.
Diageo, another major player in the beverage industry, could also feel the pinch from blanket tariffs. The company’s tequila exports from Mexico and Scotch exports to the U.S. could be significantly affected, alongside American whiskey exports to Europe, should retaliatory tariffs be reinstated. The ripple effects of these tariffs could extend beyond just a few companies, impacting a wide range of products and pricing structures within the industry.
For food manufacturers like Mondelēz International, Coca-Cola, and McCormick, the implications of these tariffs are equally concerning. A notable portion of Mondelēz’s biscuit sales comes from production facilities in Mexico, and a 15% tariff could lead to increased costs on a significant share of its total sales. Similarly, McCormick’s joint venture in Mexico would face challenges if tariffs are imposed on its exported products. Coca-Cola, however, may be less vulnerable due to its regional bottling strategy, which could mitigate some of the tariff risks.
The broader economic ramifications of a higher tariff regime could be particularly dire for Mexico, where over 30% of the GDP is derived from exports, primarily to the U.S. The potential for blanket tariffs raises questions about the legality and practicality of such measures under existing trade agreements like the United States-Mexico-Canada Agreement (USMCA). Experts, including Jeffrey Schott from the Peterson Institute for International Economics, assert that imposing across-the-board tariffs would violate the USMCA, which allows for tariff increases only under exceptional circumstances.
Should tariffs be enacted, the process for exemptions or adjustments could be lengthy and fraught with litigation from both domestic and international stakeholders. As the USMCA is up for review in July 2026, the possibility exists for current members to reassess their commitments, potentially leading to significant shifts in trade relationships.
While Canada may initially receive temporary exemptions as negotiations unfold, the lack of a permanent solution could prompt retaliatory measures on U.S. imports, further complicating the trade landscape. The potential for coercive tariff actions before the review period could escalate tensions and disrupt established trade practices, raising the stakes for consumers and businesses alike. The food and beverage industry, already navigating a complex web of supply chains and pricing pressures, now faces an uncertain future as political dynamics continue to evolve.