Trump Tariffs on Beverage Alcohol: What They Mean for the Industry

The second Trump administration has introduced new import tariffs, raising concerns about their impact on the beverage alcohol industry in the United States. These tariffs, which now apply to imports from Canada and Mexico and could soon extend to the European Union, threaten categories with legally protected designations of origin. Since these products cannot be produced in the U.S., they face significant challenges.

The Beverage Alcohol Categories at Risk

Trump tariffs on beverage alcohol could have a particularly strong impact on spirits with a single-country origin. These include agave spirits, Canadian whisky, Irish whiskey, Cognac, Champagne, and Prosecco. The IWSR, a leading source of data and intelligence on the global beverage alcohol market, has analyzed the potential effects of these tariffs. Additionally, Mexican beer imports may also be affected. Meanwhile, the U.K. is attempting to secure a separate trade deal with the U.S. to avoid tariffs on Scotch whisky.

Domestic Advantage for U.S.-Produced Spirits

While imported spirits face increased costs, domestically produced categories in the U.S. could gain a competitive edge. If tariffs cause price hikes on imports, American-made whiskey, vodka, and rum may become more attractive to consumers. This shift could reshape purchasing trends in the premium and super-premium segments.

Tariff Implementation and Global Reactions

As of March 4, the U.S. has imposed a 25% tariff on goods from Canada and Mexico, along with an additional 10% tariff on imports from China. President Trump has also announced a 25% tariff on imports from the European Union, though the timeline for enforcement remains uncertain. Countries affected by these measures are preparing retaliatory tariffs on U.S. exports, but the full impact of these countermeasures is still unfolding.

How Industry Leaders Are Responding

In a recent IWSR article, Marten Lodewijks, President of IWSR US, affirmed that the second Trump administration’s tariffs policies will almost certainly negatively impact total beverage alcohol (TBA) sales in the U.S. market. While global repercussions may be limited, the extent of the domestic impact remains uncertain.”

Brand owners must navigate these uncertain waters carefully. The complexity of tariff implications depends on multiple factors, including the duration of the tariffs, their scope, and the effectiveness of any retaliatory measures. IWSR offers tools like US Navigator, IWSR Bevtrac, and five-year forecasting models to help industry players make informed decisions.

Spirits Most Affected by Tariffs

The Trump tariffs on beverage alcohol pose the greatest threat to large single-origin imported spirits. Key categories at risk include:

• Tequila and Agave Spirits (Mexico) – The U.S. accounts for 69% of agave spirit exports, making this category highly vulnerable.
• Canadian Whisky (Canada) – With 79% of its exports going to the U.S., Canadian whisky faces a significant challenge.
• Irish Whiskey (Ireland) – Roughly 37% of Irish whiskey exports land in the U.S.
• Cognac (France) – This category sends 26% of its exports to the U.S.
• Scotch Whisky (Scotland, U.K.) – While only 11% of Scotch whisky exports go to the U.S., the premium segment may feel the pressure.

The most affected price tiers are premium and super-premium. These categories suffer the most from ad valorem tariffs, while ultra-premium-and-above products tend to have a more resilient consumer base.

U.S. Whiskey and Spirits May Benefit

In contrast, U.S.-made whiskey, vodka, and rum should see increased domestic consumption due to their exemption from tariffs. Standard and lower-priced segments also favor domestic production, meaning these categories could gain market share.

The Impact on Wine and Sparkling Wine

The wine market will also feel the effects of Trump tariffs on beverage alcohol. Still wine imports to the U.S. primarily come from Italy, France, and New Zealand. Meanwhile, sparkling wine imports are dominated by Champagne (France) and Prosecco (Italy). If tariffs extend to EU goods, these categories could face serious price increases.

However, domestically produced wine in the U.S. should benefit from a competitive price advantage. Other non-EU wine producers, such as Australia, Chile, and Argentina, may also gain market share if they continue to avoid U.S. import tariffs.

Mexican Beer and Ready-to-Drink (RTD) Beverages Under Pressure

The U.S. beer market remains largely insulated from the impact of import tariffs because most major brands are produced domestically. However, Mexican beer imports, such as Corona and Modelo, could experience price hikes that may impact sales.

Ready-to-drink (RTD) beverages, on the other hand, are predominantly produced in the U.S. and should remain unaffected by tariffs. In fact, these products may see a boost as consumers look for more affordable alternatives to premium imported spirits.

The Future of the Beverage Alcohol Market

As the industry adapts to these policy changes, the long-term effects of Trump tariffs on beverage alcohol remain uncertain. While U.S. producers may benefit from reduced competition, global trade dynamics could shift dramatically. With potential retaliatory tariffs on U.S. exports looming, beverage alcohol brands must stay agile and informed to navigate the evolving market landscape.

Stay Ahead of the Rum Curve! Get the latest trends, expert recommendations, and must-know industry news—delivered monthly!

Source of information

IWSR’s Article: Trump and tariffs: how might trade tensions affect beverage alcohol?

The image of the article is courtesy of © MicroStockHub via Canva.com