Jose Cuervo owner faces $80 million hit from Trump’s tariffs
The likely impact of President Trump’s 25% tariffs on all goods imported to the US from Mexico and Canada was put into stark reality by the world’s biggest producer of tequila, Jose Cuervo.
Jose Cuervo owner Becle warned its shareholders that the tariffs will cost it about US$80 million (£64 million) this year.
Rodrigo de la Maza, the chief financial officer, said that the company however had taken pre-emptive action and “proactively increased inventories in the US.
The downturn in the US market for tequila has already hit Becle which has reported a 21% fall in net profits as demand in the world’s biggest market for tequila slides.
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Trump has confirmed that the 25% tariffs will go ahead on Tuesday (March 4) because “drugs are continuing to pour across the border”. He believes they will force Mexico and Canada to take stronger action against smuggling into the US as well as helping to curb illegal immigration.
Becle’s capital expenditure
Excluding the impact of the probable tariff penalty, de la Maza believes Becle will incur capital expenditure this year of between US$110 million and US$ 130 million and predicts that net sales are expected to grow in “mid-single digits”.
He also said that Becle expects gross margins to be “enhanced” while we “navigate through uncertainties”.
The weak results and the revealing of the potential impact of Trump’s tariffs have wiped 4 billion pesos (US$196 million) from Becle’s share value this week.
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