Doug Price
Donald Trump’s speech by applying new prices to the goods of the largest American business partners has triggered months of uncertainty for business owners.
On Saturday, the president proven himself, commanding a new tax of 25% on the expeditions of Mexico and Canada and increasing by 10% of the existing prices on goods from China.
But that did not stop the questions.
“Is it for a day, is it a political flex or is it something that will last four years?” Asked Nicolas Palazzi, the PM founder based in Brooklyn Spirits. He directs a company of 21 people who import and sells wine and spirits, of which around 20% come from Mexico.
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Trump’s orders have set up the threats that the president discussed for months, hitting the expeditions of the three main American trade partners, who represent more than 40% of the goods of around 3 TN that the United States imports each year.
Canadian oil and other “energy resources” will be faced with a rate lower by 10%. But if not, there will be no exception, said the White House.
Trump said the prices were intended to hold Canada and Mexico responsible for the promises to fight illegal immigration and drug trafficking.
The measures come into force on February 4 and must remain in place “until the crisis is attenuated”, according to orders.
If the plans were not a surprise, they have always presented a potentially surprising blow for many companies, especially for those of North America. The three countries have become closely linked economically after decades of free trade under a treaty signed in the 1990s, then known as the Alena and updated and renowned under the Trump administration at the USMCA.
Mezcal’s growth in the United States, brought by companies like Palazzi, has been part of this change.
Since 2003, the consumption of Tequila and Mezcal has been tripled, increasing at a rate of more than 7% each year, according to Distille Spirits Council, a commercial group.
Overall since the 1990s, the trade in spirits between the United States and Mexico increased by more than 4,000%, said that the organization, which has published a declaration after the president warning that warning that The prices “would considerably harm the three countries”.
For months, Palazzi answers nervous questions from its suppliers in Mexico, which are generally small family businesses and may not survive if the prices are extended.
If it sticks, he says that the 25% tax on the bottles of Mezcal, the Tequila and the Rhum in which it brings will increase prices – and sales will drop.
“It will certainly have a negative impact on the company. But can you really plan? No,” he said. “Our strategy is the roller with the blows, wait and see and adapt to the madness that will take place.”
Economists say that the price blow could push the savings of Mexico and Canada into the recession.
Before the announcement, Dan Kelly, president of the Canadian Federation of Independent Businesses, described the imminent prices of the United States and expected reprisals as “existential” for many of its members.
“Listen, we obtain that the government must respond in one way or another … But at the same time, we urge the government to be cautious,” he said, comparing prices on imports to imports Chemotherapy: “It drives your own people to try to fight the disease.”
“It will have an effect everywhere,” said Sophie Avernin, director of De Granddes Viñedos de Francia in Mexico, noting that many Americans have Mexican alcohol brands and Modelo beer actually belongs to a Belgian company.
Trump, who adopted prices as a tool to solve the problems distant from trade, rejected concerns about any collateral damage to the economy in the United States.
But analysts have warned that measures will weigh on growth, increase prices and cost economic jobs – around 286,000, according to estimates by the Tax Foundation, without reprisals.
People in the alcohol sector said that industry has already had trouble emerging from the shadow of the pandemic and its consequences, including inflation, which has prompted many Americans to reduce the catering and drinking.
Small businesses, which generally have less financial cushion and ability to swallow a leap of 25% of costs, will bring the weight of the disturbance.
“I am quite frustrated,” said the importer of California, Ben Scott, whose company of nine people Pueblo de Sabor brings marks from Mexico such as bad well and Lalocura.
“There is just a huge cost that will affect so many people in a different way as they do not pay dollars for a cocktail, which does not look like a tragedy.”
Bad import hombre
Fred Sanchez founded his business, Bad Hombre Importation, a small importer from California of Mexican spirits from Agave as Agua del Sol, in 2014 and recently worked on offers to extend its sales in New York and Illinois.
But his potential partners had hesitated when Trump’s pricing conversation accelerated last year.
Now, instead of expanding, he plans to sell his stock of alcohol and perhaps close. He says that he has little capacity to absorb the leap of costs and sees few possibilities to raise prices in the current economy.
“25% is simply not something that we can transmit realistically to the consumer,” he said.
Sanchez said he thought Trump could use prices as a negotiation tactic, and that the tax could be short -lived. However, for his business, damage is already done.
