As policymakers consider implementing tariffs on Mexican beer, a recent economic report suggests such a move could inadvertently harm American workers, rather than protect them, by squeezing a highly profitable segment of the U.S. beer market.
The analysis, co-authored by Unleash Prosperity co-founder Stephen Moore and economist David Ozgo, arrives as the administration continues to expand its tariff strategy. Officials have stated this strategy aims to re-shore manufacturing, reduce trade deficits, and strengthen American industries.
While Mexican beer is brewed south of the border, Ozgo emphasizes that the majority of jobs it supports – including those in distribution, wholesaling, and retailing – are located within the United States.
Economic Impact and Job Support in the U.S.
The report supports this assertion with data indicating that the U.S. beer industry broadly sustains approximately 1.74 million jobs. However, only about five percent of these positions are directly involved in the brewing process. The overwhelming majority of workers are employed by wholesalers, retailers, restaurants, and suppliers who handle beer after it has been brewed. These jobs would remain in the U.S., even when the product is imported.
"If you end up slapping tariffs on Mexican beer, you're not protecting American workers," Ozgo stated. "What you're really doing is cutting into the most profitable segment of the beer market right now and in turn putting U.S. jobs at risk."
According to the findings, Mexican beer already commands a price approximately 52% higher than mass-market domestic lagers in grocery and liquor stores. The authors contend that these higher prices translate into larger profits for U.S. distributors, retailers, restaurants, and bars, thereby helping to support more American jobs than less expensive domestic lagers.
The report further notes that these elevated prices generate greater economic value across the U.S. economy.
The economists estimate that each gallon of Mexican beer generates about $26.27 in overall economic value. Of this, approximately $19.42 – roughly 74% – benefits U.S. businesses and workers through various activities such as distribution, retail, transportation, marketing, taxes, and other domestic economic contributions. In contrast, leading domestic beers generate about $15.76 in total value per gallon.
Consequences for Consumers and Brand Integrity
Ozgo explained that tariffs would ultimately compel brewers to either absorb the additional costs, reduce investment, or pass these expenses on to consumers through increased prices.
"Either the company itself has to eat the cost of the tariff, or they pass the cost to the consumer," he remarked. "Either outcome isn't very good."
The report also argues that relocating the production of Mexican beer to the United States could diminish the brands' authenticity and perceived value. It points to the example of Anheuser-Busch InBev's decision to move Beck's beer production from Germany to Missouri, which subsequently led to consumer litigation when the company continued to market the beer as German.
Furthermore, the report highlights that Constellation Brands, the importer of popular brands like Corona, Modelo, and Pacifico, operates under a Justice Department consent decree that mandates these brands be produced in Mexico.
"Consumers really, really value authenticity," Ozgo commented. "When you move an import into the United States and you continue to market it as an import, you end up losing value."
The administration has broadly asserted that tariffs are intended to foster domestic manufacturing and strengthen American industry, though officials have not yet specifically outlined a final policy regarding Mexican beer imports.
