Trump to levy 20% tax on Tequila importsBy Kristiane Sherry
US president Donald Trump says he will impose a 20% tax on imports from Mexico, including Tequila, as a row over who should pay for a proposed US$15 billion border wall between the two countries escalates.
The mooted levy follows Mexican president Peña Nieto cancellation of a meeting with Trump after his US counterpart insisted Mexico would foot the bill for the wall.
White House spokesperson Sean Spicer said the 20% tax would generate up to US$10bn a year in tax revenue, which would “easily pay for the wall”, reports the BBC.
However, with Mexico the US’s third largest supplier of goods imports in 2015, according to the United States Trade Representative, critics say the cost of the tax will fall on American consumers rather than the Mexican state.
According to the US government office, US goods imports from Mexico totalled $295 billion for the year, with wine and spirits imports valued at US$2.7bn.
Between 2010 and 2015, Tequila and mezcal volume sales grew 30% in the US – more than any other alcohol category bar Cognac – and faster than the global average, which sits at 22%, Euromonitor figures state.
As interest in Mexican heritage grows, the Tequila and mezcal industry in the US is forecast to grow 17% between 2015 and 2020.
While Tequila producers should prepare to navigate economic turbulence, drinking trends will not change, asserted Euromonitor analyst Spiros Malandrakis last year. “Tequila has been ubiquitous in the US for a very long time now, so to say Americans will stop drinking Tequila is like saying that they will stop eating tacos,” he says. “Cultural integration goes further than one electoral process.”
However the move to implement a 20% import tax has cast doubt over the future of NAFTA, a zero-tariff pact between the US, Canada and Mexico agreed in 1994. Trump is critical of the deal.
Earlier this month, Trump fulfilled a campaign pledge by signing an executive order to withdraw the US from the Trans-Pacific Partnership, a 12-country trade deal implemented to boost economic ties and growth.