Andrew Muhammad
The proposed 25% tariff on Mexico and Canada could have significant repercussions on US imports of distilled spirits. This study estimates US import demand across various spirit categories (e.g., tequila, whiskey) and assesses the potential impact of the proposed tariff. Findings project that imports could decline by more than $1.0 billion, potentially falling by as much as $1.4 billion, primarily due to a substantial decrease in tequila imports. Interestingly, even imports not subject to the tariffs are expected to decline due to the complementarities in importing. Despite the inelastic nature of demand, the results suggest that trade losses would exceed any revenue gains from the tariffs