The stock price of Constellation Brands decreases due to the possibility of increased costs for Modelo and Corona due to Trump's tariff plan.

• The stock of Constellation Brands decreased following President-elect Trump's announcement of a 25% tariff on imports from Mexico.
• In Mexico, the brewer produces all of its beers, accounting for 86% of its sales.
• If tariffs are implemented, the company may choose to increase prices to cover the additional costs.

After President-elect Donald Trump announced plans to impose a 25% tariff on Mexican imports, shares fell 4% in morning trading.

In the first half of its fiscal year, 86% of Constellation's sales came from beer imported from Mexico, which included brands like Modelo and Corona.

The market cap of the brewer, Constellation, is $43.88 billion, and its shares have fallen 4% this year, including Tuesday's move.

According to a research note from Wells Fargo Securities analyst Chris Carey, published on Tuesday, if implemented, Trump's proposed tariff would increase Constellation Brands' cost of goods sold by approximately 16%.

The best-selling beer in the U.S., Modelo Especial, overtook Bud Light last year.

It is unlikely that Constellation will relocate its beer production from Mexico due to an antitrust settlement between AB InBev and the Department of Justice in 2013, which mandated AB InBev to sell Modelo's U.S. business to Constellation. As per a research note from Roth MKM analyst Bill Kirk, the agreement requires Constellation to produce those beer brands where AB InBev makes them.

In recent years, billions of dollars have been spent by Constellation to increase its production capacity in Mexico.

Trump has previously proposed a 5% tariff on Mexican imports, with plans to increase the tariffs up to 25%, but those tariffs were not enacted.

In 2020, a new trade agreement was signed into law by Trump involving Mexico and Canada.

Trump announced on his Truth Social platform on Monday night that he plans to impose an additional 10% tariff on goods from China and a 25% levy on Canadian imports.

On Tuesday, shares of automakers, including General Motors and Stellantis, were trading lower due to concerns about tariffs.