The shares of Constellation Brands fell by 5.8 percent on Friday after President Donald Trumps threatened to cancel duties on all Mexican imports.
The decline was the biggest one-day loss since January. 9 for the manufacturer of Mexican Beers such as Corona and Modelo.
On Thursday evening tweeted Trump a 5% tariff for all goods from Mexico, from 10. June will be” until the illegal immigrants coming through Mexico and into our country, STOP.”The White House then said in a statement that taxes on Mexican imports would rise up to 25% if immigration problems remained along the border between the US and Mexico. Mexico’s president Andres Manuel Lopez Obrador responded to the threat in a letter to Trump: “social problems cannot be solved with taxes or coercive measures.”
Tariffs on Mexican goods would reduce the stocks of the brands. According to Morgan Stanley, about 75% of his beer portfolio is “fully imported” from Mexico. The bank also notes that a 5% duty on Mexican goods would shave almost 4% of the total amount of the company. A levy of 25 percent would break down the profit by 19 percent.
BMO Capital Markets notes that the impact may be larger. An analyst at the bank estimates that 95 to 98 percent of its beer is imported from Mexico.