“It’s important to consider that generating chaos produces more chaos,” said Graciela Ángeles Carreño.
Graciela, who is the recent author of Mezcalli: the world of agave spirits in Mexico, is also the representative for her family’s mezcal brand, Real Minero. As a family-owned brand, they are likely to be among the hardest hit by the 25% tariffs the Trump administration has imposed on products imported from Mexico to the US.
But the effects will no doubt ripple from through agave spirits communities–from producers to consumers.
In a news conference on March 4, President Claudia Sheinbaum expressed shock at President Trump’s decision to go through with the 25% tariffs on Mexican products.
During the past 30 days, Mexican authorities have been scrambling, with some success, to meet the stipulations the Trump administration ordained as a path toward rescinding the threatened tariff. Sheinbaum noted her government’s movement against organized crime, including sending thousands of National Guard troops into Sinaloa to bust fentanyl operations and thousands more to patrol the US border.
“We have worked and delivered results on security matters,” the Mexican president said. According to the Drug Enforcement Agency (DEA) fentanyl seizures at the southern border with Mexico dropped 20% in 2024 and continue to trend lower so fat this year.
As the New York Times reported, José de Jesús Rodríguez, president of Mexico City’s chamber of commerce, said, “The United States broke their word, and it dictates the future of our commercial relationship.”
US enterprises buy more than three quarters of Mexico’s exports, and the US is the world’s largest market for tequila.
With much of the world in chaos, it could be easy to dismiss the fate of the agave spirits industry as among the least of our problems. But as readers of this publication are well aware, this is about much more than a likely increase in the prices of tequila and mezcal. It’s about thousands of farmers, producers, workers, brand-owners, bar-owners, restaurateurs, bartenders, servers, and the communities that surround these institutions.
According to analysis by the Distilled Spirits Council of the United States (DISCUS), the tariff on liquor imports from Mexico and Canada could lead to the loss of more than 31,000 jobs–in the US alone.
On the one hand, “Don’t Panic” may be the best advice. Trump is notoriously fickle. Only one day after dramatically imposing the blanket tariffs, he offered a one month reprieve to carmakers. However, there’s the real possibility that other aspects of the tariffs won’t be retracted. So what will this mean for the agave spirits industry? What will it mean for the bar industry? And what will it mean for consumers?
How are the tariffs going to affect the price of tequila and mezcal?
Grover and Scarlet Sanchagrin, of Tequila Matchmaker and the Additive Free Alliance, provided incisive analysis: Consumers shouldn’t necessarily expect immediate price increases and when those price increases do arrive, they may not be as dramatic as you expect.
The Sanschagrins surveyed a handful of tequila brand owners who are looking for workarounds to prevent increasing prices–in the hopes that the tariff temporary. Some brand owners are making deals with importers and distributors to avoid passing the cost on to the consumer.
But eventual cost increases are the undoubtable outcome if the tariff stays in place. This doesn’t mean that prices will sky-rocket. The Sanschagrins note in their Taste Tequila newsletter, “You shouldn’t expect the retail price to increase by a full 25%. The tariff is calculated based on the invoice amount at the border. So, for example, if a tequila bottle on a retail shelf has a current price of $60, the cost of that bottle at the border might be $20 (before the importer, distributor, and retailer each add to the price). So, in this case, the tariff would be $5, not $15, as some would believe.”
Of course that’s not the end of the story. “Some distributors and retailers will want to add margin to the new amount, so you may expect that $60 bottle to come in close to $67 if these tariffs take effect,” the Sanschagrins point out.
How will the tariffs affect the tequila and mezcal industries?
When it comes to producers and tequila and mezcal brands, we’re already seeing differences in opinion on who will be hit hardest.
For “single-origin” spirits categories such as mezcal and Canadian whiskey, the ISWR posits, “The most vulnerable price tiers are likely to be premium and super-premium.” They note that these categories are the hardest hit by ad valorem tariffs, while the consumers of even higher tiers (ulta-premium and above) tend to be less sensitive to prices.
Marten Lodewijks, president of the IWSR US, notes “Tequila is the most heavily exposed spirits category in terms of export reliance on the US, and being skewed to the premium/super-premium price tiers that would suffer a heavier hit from an ad valorem tariff.”
But while this skewing toward premium products may make the tequila industry more vulnerable as a whole, it doesn’t necessarily mean that premium brands will be hardest hit.
When we reached out to Grover Sanschagrin, he noted “The premium products won’t be hit as hard because they have some margin. The super cheap stuff with tiny margins will be forced to raise prices.”
This insight on the tequila industry doesn’t necessarily apply to mezcal. In an over-saturated US market, small premium brands are already struggling to get shelf space. It’s important to note that this means most mezcal brands. Some of the most revered artisanal and ancestral mezcal brands are already at a high price point and don’t have corporate backing to help absorb the impact of an increase. It seems likely that a number of these brands would not be able to compete if their sticker price went up, and that many more newer brands would not even bother even broaching the US market. We were seeing the latter trend before the tariffs were put into place.
“What effects will the increase in taxes have on the quality of the products that are available for the consumer to purchase?” asks Graciela Angeles of Real Minero.
What are mezcal and tequila brands to do?
While there has been talk of focusing on dramatically expanding the domestic market, it’s important to note that Mexican liquor tax rates are so high–a total of 69%–that this isn’t really a viable alternative to avoiding the 25% tariff enstated by the Trump administration.
When asked for her analysis, Mezcalistas publisher Susan Coss observed that the current administration is developing a reputation for breaking long-standing relationships. “Once broken, trust is very difficult to repair, shrouding any future deals with doubt. That’s not a great environment for businesses to operate in. Given the chaos, the constantly changing goal posts to negotiate, it seems folks will need to be prepared at all times to have a plan A,B, and C.”
She points to European markets and China, where interest in agave spirits is on the rise.
Given the complexities of global trade and taxation systems, this shift of focus will likely be gradual and may not be enough to save smaller businesses. As Susan notes, “The big guys like Diageo can spread any increases across various products and parts of the business, medium sized companies can likely do a mix and pass on just a slight increase. The small operators just don’t have the ability to absorb the additional taxes and will need to pass them on.”
This sentiment is echoed by Ivan Lane, a 20-year veteran of the spirits industry in Oregon, who has worked as a buyer and consultant.
“Agave is going to see a huge depletion in these excellent small brands, a number of which have just invested their entire brand’s value into increased or modernized production methods under the guise of the huge growth of interest led by the US market.”
In terms of other long-term effects, Ivan postulates that the tariffs could lead to further cutting of corners.
“Laws protecting consumers on quality of end product as well as clarity of production method will continue to weaken as the largest producers champion quantity over quality.”
No one we’ve interviewed about the tariffs has painted a pretty picture for agave farmers, the tequila and mezcal industies, the restaurant industry, the bar industry, or the consumer. As Graciela Ángeles Carreño asked, “And in the end, when the whole negotiation is over, who will lose the most?” A good question that raises in another good question: Who will win?
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