New US import tariffs set to disrupt beverage alcohol market, IWSR 

GLOBAL – United States President Donald Trump has confirmed new import tariffs that could significantly impact the beverage alcohol industry in the United States.  

As of March 4, the US has imposed a 25% tariff on beverage alcohol imports from Canada and Mexico, along with an additional 10% tariff on Chinese imports.  

The Trump administration has also announced plans to introduce 25% tariffs on European Union (EU) imports, though the implementation timeline remains unclear. 

The move has raised concerns about retaliatory tariffs from affected countries, which could further escalate tensions in international trade. Reports suggest that some nations are already considering imposing countermeasures on US exports. 

Impact on single-origin spirits and Premium Imports 

According to the IWSR, a leading authority on beverage alcohol data, single-origin spirits with legally protected designations of origin are the most vulnerable to these tariffs. These products cannot be re-shored and produced in the US, making them susceptible to price hikes and reduced competitiveness. 

Among the most affected categories are: 

• Agave spirits (Tequila and Mezcal) from Mexico 

• Canadian whisky 

• Irish whiskey 

• Cognac from France 

• Champagne and Prosecco 

• Mexican beer 

The UK, however, is currently negotiating a separate trade deal with the US to prevent tariffs on Scotch whisky and other exports. 

Premium and super-premium spirits are particularly at risk, as ad valorem tariffs (which are based on a product’s value) disproportionately impact higher-priced items. Ultra-premium spirits may be less affected due to their relatively price-insensitive consumer base. 

Tequila faces the greatest risk 

IWSR President for the US, Marten Lodewijks, highlighted that Tequila is the most exposed spirits category due to its heavy reliance on US exports. The category also skews toward premium and super-premium price tiers, which are likely to suffer the most under the new tariffs. 

Canadian Whisky and European spirits under pressure 

Canadian whisky, while impacted, has a strong presence in lower price tiers, making it less vulnerable than premium categories, IWSR says. However, competition from US-made whiskies and tariff-free imports from other countries could pose additional challenges. 

Scotch and Irish whiskies, which are predominantly positioned in the premium market segment, are also under pressure. IWSR notes that inflation has already weakened consumer purchasing power in these categories, making them more susceptible to downtrading.  

Notably, tariffs on Scotch whisky are not expected to be reinstated until 2026, offering temporary relief. 

Domestic US spirits stand to benefit 

While imported spirits face pricing challenges, US-produced whiskey, vodka, and rum are poised to gain from a competitive price advantage. These products, which are largely made domestically, will likely become more attractive to consumers seeking alternatives to higher-priced imports. 

However, US spirit exporters could face retaliatory tariffs from other nations. IWSR analysts believe the impact may be mitigated by the time it takes for such measures to be enacted and the availability of existing tariff-free inventory.  

Furthermore, only a limited number of US spirits brands have significant global distribution, reducing overall exposure. 

Potential disruptions in the wine and beer markets 

If the US moves forward with tariffs on EU imports, IWSR highlights that Champagne and Prosecco exports could be severely impacted. However, US wine producers, who primarily cater to the domestic market, could gain a competitive edge in pricing. 

Non-EU wine producers, such as Australia, New Zealand, Chile, and Argentina, are expected to benefit from the situation as long as they remain exempt from US import tariffs. 

Meanwhile, the US beer market is largely insulated from these tariffs since most brands are produced domestically. The main exception is Mexican beer imports, which could see price increases and reduced demand. 

RTDs and domestic beer expected to gain market share 

The ready-to-drink (RTD) sector is expected to remain largely unaffected by the new tariffs, as most RTDs are produced in the US. Analysts predict that RTDs could even gain market share as consumers shift away from imported spirits.  

The domestic beer industry is also likely to benefit, capturing a greater share of the market from imported competitors. 

While the full effects of the new tariffs are yet to unfold, early indicators suggest significant shifts in the US beverage alcohol market.  

Premium imports will face pricing challenges, domestic producers may gain an advantage, and global trade tensions could lead to further retaliatory actions. 

Sign up HERE to receive our email newsletters with the latest news and insights from Africa and around the world, and follow us on our WhatsApp channel for updates.