Trump’s tariffs and immigration policies are affecting a lot more industries than initially expected. Since the decisions he and his administration are carrying out are so broad and haphazard, companies are coming out left and right complaining about the seemingly unintended effect that the consequences are having for their bottom line. The first companies to do so were Tesla and Apple (and they have already gotten exemptions from the more outrageous policies) but now Constellation Brands, the U.S. importer of Modelo and Corona beer is joining in with their own set of complaints related to the decisions on both tariffs and immigration.
This might seem superficial, as we are talking about beer, but the reality is that all industries are affected by economic decisions, and Modelo was on a meteoric rise before Trump came into office, so these changes are really affecting their bottom line. In a surprising turn of events, last year Modelo overtook Bud Light as the nation’s bestselling beer. Constellation’s excitement over this achievement as short lived, because as soon as Trump came into office, sales fell for the first time in more than a decade due to what the company is attributing to declining demand among Hispanic consumers.
CEO Bill Newlands floated his theory in an interview with the Wall Street Journal where he pointed out that Latino shoppers were afraid after the new president came into office and that made their sales plummet as Latino customers make up more than half of Modelo’s U.S. customer base. “If that consumer has concerns, issues, et cetera, that’s a big deal for us. […] Many consumers within the Hispanic community are quite apprehensive at this moment. Social events, which are typically occasions where Hispanic consumers enjoy beer, are currently on the decline due to these overarching worries.”
And his fears are not unfounded, in trying times such as this one, communities become more insular, favoring local businesses run by like-minded people and keeping a low profile over going to new places that could get them in trouble. This means that many Americans (especially those of Latino ascent) that would have previously shopped in smaller retailers in Hispanic neighborhoods are now choosing to go to larger retail chain stores where they can blend in and avoid being targeted by immigration enforcement, aka, keeping a low profile to avoid issues with the law.
The impact the Trump tariffs are having on Modelo
While it still might seem like we are overreacting, the financial impact of all these decisions and circumstances is quite impressive, as it could add up to about $1 billion in annual costs. Constellation anticipates this financial hit from the 25% tariffs introduced by Trump which took effect on April 4 and apply to all imported canned beer and empty aluminum cans.
This is because although the company’s major brands like Modelo, Corona, and Pacifico are not subject to tariffs on Mexican imports, the aluminum packaging they rely on is and Constellation’s latest financial report shows that beer sales made up 78% of its total net revenue in the previous quarter. In light of the new tariffs, the company has revised its future guidance, scaling back both its earnings and sales expectations. Beer sales in fiscal 2026 are now expected to be relatively flat, and projected annual growth over the medium term has been adjusted to 2%–4%, down from the previous forecast of 6%–8%.
The company is not in trouble just yet, but its stock has dropped 17% since the start of the year and since they need to plan to increase pricing on a lot of their products due to the effects of the tariffs, they do not expect revenue to pick back up any time soon, especially if customers continue to avoid licensed retailers.