EsProposals from the Republican Party to introduce a border-adjustable tax as part of the broader budget could greatly complicate trade policy. In the beer industry, for example, Mexican producers can import raw materials from the U.S. free of duties or other restrictions and export beer. A renegotiation of NAFTA may change that, the Chicago Tribune reports. If a border-adjustable tax is also applied (which does not allow import costs to be deducted for tax purposes), manufacturers will need to decide whether to increase prices or relocate production.
Panjiva data shows that the U.S. runs a “beer deficit” (i.e. imports less exports) of 3.26 billion liters per year. Of the 3.93 billion liters imported annually, 65.8% comes from Mexico. Shipments from there have increased 38.1% vs. three years ago at the expense of shipments from Canada, which have dropped 25.1%.
Trends in tastes have also seen British beer imports (arguably the highest quality product available) dropping 49.9% while biers from Germany have enjoyed a 59.3% expansion. Shifting tastes, along with economies of scale, have resulted in the emergence of global brands – for example Heineken exports beers to the U.S. from over a dozen countries.
Source: Panjiva
Exports from Mexico to the U.S. hit their second highest on record in March, despite only rising 1.7% on a year earlier. Shipments will come to be dominated by Constellation Brands, which acquired production facilities from AB InBev as part of a broader shift to increase beers including Mexican brands such as Corona, Modelo and Pacifico. Should a mixture of border adjustable taxes or renegotiation disrupt sales in the U.S. then Constellation will need to increase sales globally. In the past 12 months 75.9% of exports of all Mexican beers went to the U.S., with the U.K. and Australia the next largest markets at 4% of the total or lower.
Source: Panjiva
