Trump's threatened tariffs in Mexico are rambling over the country's tequila industry, despite the promised 25% collection still not yet in effect.
Tequila's leading producers and retailers have won large stockpiles of agave-based spirits that can only be made in Mexico, but have paid a large storage fee. Reuters reports that they will put on hold on employment and product launches.
All of these strategies could backfire if Trump is currently in a second 30-day hiatus, if he returns his tariff pledge.
“No matter what happened… the price was paid,” said Mike Novy, CEO of Calabasas Beverage Company, which runs Kendall Jenner's 818 Tequila brand.
For example, Calabasas could ask the distillery to let workers work overtime during their December holidays, and deliver six months of tequila to the US before tariffs come into effect, Nobby said.
These additional hours increased the costs paid to $2 million to avoid duties in the $2 million.
Brian Rosen, founder of InvestBev, an investor affiliated with the early stage Spirits brand, said that the Tequila company in his portfolio has also built six months of supplies, paying $20,000 for each additional storage container.
Companies can be tempted to raise prices and hand over the cost of storage fees to consumers. So, even if Trump's tariffs on Mexico are scrapped, shoppers could still look higher for tequila prices, Rosen said.
Two of the largest tequila producers, Diageo and Becle previously guaranteed that investors stocked up stockpiling stock prior to tariffs.
The companies did not immediately respond to requests to post comments.
Mexican restaurants that lean heavily towards the popular margaritas will feel the heat when tariffs are discarded and stuck in oversized stock.
La Contensa Auste, a Mexican restaurant in New York, has ordered 120 tequila and 80 mezcal cases since January.
He usually only buys 20 cases at a time.
If Trump shelved the tariffs, he said, “I'm going to have a lot of tequila.”
Drinkers did the same thing. Indianapolis communications expert Richard Page said he prefers tequila and has confirmed that his choices have been in stock for at least several months.
Such actions could be a “very quiet” second quarter for producers of major tequila, said Bernstein analyst Trevor Sterling.
Meanwhile, in Mexico, representatives of tequila brands and industry associations said companies will look to new markets.
“It's already happening,” he continued. “If (customers) is permanent, the results will expand.”
With post wire
