Teamster President Sean O'Brien has called on President Donald Trump to impose tariffs on Mexican beer brewers.
O'Brien wrote to Secretary of Commerce Howard Luttonick on Monday to ask him to “develop a strategic plan to utilize all the tools at his disposal (including covered tariffs where necessary) to restore economic balance and equity in his business relationship with Mexico.”
According to O'Brien, Teamsters Brewery, Bakers and Soft Drink Conference represent more than 80,000 American workers and more than 200 local unions. He raises concerns to Rutnic about US workers who have to compete with Mexico's low-wage work.
The US has one of the imported stocks of beer when compared to other major powers. Beer imports exceed foreign imports of other well-known categories such as automobiles. As you may know, the majority of our beer imports come from Mexico, where labor costs and wages are in the US. These conditions are particularly concerning given that union representatives are close to 80% among large US brewers.
Our country's trade policy should encourage competition from the perspective of labor standards across North America, and we should not force US workers to compete with low-road Mexican companies paying dollars to workers' pena for competition.
If historical trends are allowed to continue, foreign beer imports will grow to almost 40% of U.S. total consumption, and production and utilization of large U.S. breweries will continue to decline. Estimated losses to the US economy from a GDP perspective can range in the $23 billion range, pose a risk to tens of thousands of great union jobs and the communities that these jobs maintain throughout our country.
Earlier this month, Trump imposed a 25% tariff on Canada and Mexico. However, products complying with the US Mexico and Canada Agreement (USMCA) will be exempt from a 25% customs duties until April 2nd. Trump's trade policy promotes manufacturing and production oversight into the United States.
One of the leading companies that may be subject to tariff impact is Constellation Brands. It owns a brand license for popular Mexican-produced beer such as Corona and Modelo in the US. In October, Bill Newlands, CEO of the company. Minimize If Trump wins, if you're talking to CNBC's Jim Kramer, the fear about potential tariffs:
“First of all, assuming we have a Trump administration, we already had four years of Trump administration and our business had risen double digits between the windows of that time,” Newlands said. “The second is that there's a fair amount of input that will become beer in Mexico since coming from the US. I doubt there's a tariff perspective indeed. How do you hurt American farmers?”
He went on to say, “These are real Mexican beers,” and add, “You have to make them in Mexico.”
Evercore analyst Robert Otterstein; Estimated 99% of constellations' brand beer products are imported from Mexico, and his forecasts show that a 25% tariff could lead to a significant “revenue of $3.50 per constellation.”
“If Constellation can run on some of these tariff offsets, the revenue hit could still be $2.40 per share,” the outlet added.
