Constellation Brands’ stock falls as Trump tariff plan threatens to make Modelo and Corona more expensive
Mario Tama | Getty Images
Shares of Constellation Manufacturers fell 3.5% on Tuesday after President-elect Donald Trump announced plans to space a 25% tariff on Mexican imports as soon as he’s inaugurated.
Constellation imports all of its beer from Mexico, including Modelo and Corona. Beer accounted for 86% of Constellation’s sales in the first half of of its fiscal twelve months.
Shares of Constellation bear fallen more than 3% this twelve months, including Tuesday’s skedaddle. The brewer has a market cap of about $42 billion.
If applied, Trump’s proposed tariff would lift Constellation Manufacturers’ worth of items supplied by roughly 16%, in line with a be taught convey from Wells Fargo Securities analyst Chris Carey published on Tuesday.
To offset the tariffs, Constellation would seemingly lift prices. The brewer has some pricing power, even with inflation-weary shoppers. Last twelve months, Modelo Especial overtook Bud Gentle because the bestselling beer in the U.S.
It be not going that Constellation would skedaddle its beer production out of Mexico. Thanks to an antitrust settlement between Anheuser-Busch InBev, Grupo Modelo and the Department of Justice in 2013, AB InBev needed to sell Modelo’s U.S. substitute to Constellation. That settlement requires Constellation to manufacture those beer brands where AB InBev makes them, in line with a be taught convey from Roth MKM analyst Bill Kirk.
In recent years, Constellation has spent billions of bucks to enlarge its Mexican production potential.
It be unclear if Trump will in actuality pause his deliberate tariffs. In his earlier term, he proposed a 5% tariff on Mexican imports, with plans to escalate the levies up to 25%, however those tariffs weren’t applied.
In 2020, Trump signed a new substitute settlement with Mexico and Canada into law.
In the Monday night submit on his social media platform Truth Social, Trump additionally threatened to put in force an additional 10% tariff on items from China and a 25% levy on Canadian imports.
Shares of automakers, including Total Motors and Stellantis, were additionally buying and selling decrease on Tuesday on tariff fears.
