President Donald Trump’s executive orders imposing sweeping tariffs on Canada and Mexico are set to go into effect Tuesday, with the potential to raise prices for University of Wisconsin-Madison’s drink of choice.
Trump put the tariffs on pause for 30 days until Monday, with North America temporarily avoiding a damaging trade war that would have increased the cost of everyday goods. However, Trump said Monday afternoon there was no chance for a last-minute deal to avoid the tariffs.
Under Trump's executive orders, all goods imported from Canada and Mexico would be subject to a 25% tariff, except Canadian energy products, which would face a 10% tariff. The 10% on Chinese goods is still expected to take effect Tuesday.
Tariffs could lead to higher prices for consumers, economists have said. That could mean higher prices for imported Mexican beers and tequilas as well as Canadian whiskey.
If the tariffs are put in place, how long will it take liquor prices to rise?
Consumers could see a swift uptick in prices, though it depends on how much importers, distributors, liquor stores and bars have in inventory. If the tariffs hold, prices will inevitably rise unless a firm along the supply chain decides to eat the increased cost.
How quickly firms are willing and able to raise their prices remains to be seen, Peter Simon, an economics professor at Northeastern University, told the New York Times in February. While some price increases may represent a legitimate response to rising costs for firms, there is also the risk of opportunistic pricing, companies using tariffs as an excuse to raise prices even more than necessary, Simon said.
Mexican and Canadian spirits are popular among U.S. consumers
In 2023, tequila surpassed whiskey as a leading subcategory in the U.S. spirits market, reaching $6.5 billion in sales, second only to vodka, according to the Distilled Spirits Council of the U.S.
All authentic tequila comes from Mexico, which makes it particularly vulnerable to tariffs. Imports are essential to meet Americans' demand for tequila-based drinks, such as the classic margarita.
Data from 2023 shows Modelo's market share rose to 10.7%, becoming the most popular beer in America. Summer 2024 data shows Modelo retains the lead with Corona in fourth, together comprising 14.5% of the U.S. beer market.
Canadian whiskeys, including Crown Royal and Fireball, are affected by the tariff. Fireball Cinnamon Whisky, a college bar shot favorite, is imported from Canada and could see a significant price hike.
Consumers and college students alike may substitute for cheaper beers and liquors when prices rise.
Ty Javier is a senior staff writer and photographer at The Daily Cardinal. He is an Economics major and has specialized in university and campaign finances, economic policy and transit.
