Tariffs Are Already Hurting Tequila Producers And Importers

Forbes

22-04-2025

Talk of tariffs has already destabilized the tequila industry. If the tariffs go into effect, some experts predict the economic harm won't be limited to agave farmers and tequila producers.
When it comes to tequila and tariffs, talk has not been cheap. In March, the Trump administration briefly instated a 25% tariff on Mexico. Though it was soon temporarily suspended, this move and discussions around future tariffs have already had a negative impact on the tequila industry.
Amanda Blue, president of the Tasting Alliance, which runs the San Francisco World Spirits Competition and several other popular spirits competitions, says many tequila producers she interacts with are not happy.
'There's a mass amount of uncertainty and a lot of general resentment towards American leadership,' she says.
Tequila and other types of mezcal are the second-best-selling spirit in the U.S. according to the Distilled Spirits Council. The Council's annual report noted that in 2024, tequila and mezcal sales were up 2.9% and totaled $6.7 billion — only vodka sold more. However, since President Donald Trump's tariff proposals gained serious traction, many tequila producers have canceled expansion plans and product launches and are rethinking marketing strategies. Andrew Muhammad, an economics professor at the Institute of Agriculture at the University of Tennessee, believes its possible some tequila producers might focus on distributing their products outside of the U.S.
'Companies need stability in supply chains, and they need stability in trade policy,' he says. 'This type of uncertainty that says at any given moment your product can face not just tariffs, but tariffs out of nowhere at the whim of leadership, it makes you say, 'Well, the European market is stable, and maybe their customers will be willing to pay this extra price for transport.'
Near Puerto Vallarta, Jalisco, Mexico —- Wall of different tequila bottles at Mister Tequila tasting gallery —- Image by © Holger Leue/Corbis
'If tariffs are imposed immediately, we'll likely see a price reaction on the shelves. We could be talking about increases of up to 10 percent for tequila in an extreme case,' Laura Noguera a tequila expert and judge who lives in Mexico City. She adds, consumers in the U.S. may also have fewer tequila and mezcal varieties to choose from. 'Tariffs could affect the quantity and competitiveness of tequila exported to the United States, the main market for this spirit, and many brands would be affected, especially artisanal and low-production tequilas.'
Talk of more significant U.S. tariffs is not just disrupting tequila. Blue has heard from global spirits producer who have now decided to skip attempting distribution to the U.S. 'They are trying to refocus their efforts on other countries where it's easier to deal with the distribution system and not as expensive,' she says.
Tequila producers might employ a similar strategy long-term, but it's a less palatable move for them in the interim. 'There's not a real appetite yet for tequila in Europe,' Blue says. 'America really is the market that they need to break into, so they're really stuck in a hard place.'
Sales of tequila at bars, restaurants and liquor stores could be impacted by proposed tariffs on the spirit.
Consumers and producers in Mexico are not the only ones who will be impacted. Based on a 25% tariff rate that Trump initially proposed, Muhammad estimates that tequila importers will lose $800 million in trade. This number doesn't even take into account potential losses faced by middleman distributors, bars and restaurants. 'So there's a lot of economic value-added activity that we will also lose that's not captured in just the trade loss,' Muhammed says.
The Trump administration has claimed the tariffs will generate revenue for the U.S. government, but Muhammed's research suggests these gains will not outweigh the costs to businesses and consumers in general. Tequila is a particularly unusual item to receive significant tariffs because it cannot be produced in the U.S. and can only be made in select regions of Mexico.
'The whole point of tariffs is to encourage domestic production,' Muhammed says. 'One of the things I think we often lose sight of is imports are a function of our consumption exceeding what we're able to produce, as well as a function of our taste exceeding what we're able to produce.'