(Bloomberg) -- Constellation Brands Inc. expects aluminum tariffs to cost the company roughly $20 million over the remainder of its fiscal year, which runs through February.
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President Donald Trump’s current 50% duty on imported aluminum, part of his US trade overhaul, directly impacts companies such as Constellation that rely on aluminum cans for packaging. While many alcohol imports from Mexico remain exempt, beer packaged in aluminum is subject to the new levy.
The tariff didn’t affect results in the fiscal first quarter that ended May 31, but will weigh on margins going forward, Chief Financial Officer Garth Hankinson said on a call with investors Wednesday. The company doesn’t expect to fully offset the added cost, which will shave about 20 basis points from margins, he said.
Related: Alcoa Reports $20 Million Tariff Hit on Imports From Canada
The beer division remains Constellation’s biggest moneymaker, but margins have come under pressure amid rising costs and softening demand.
“Consumers are not going out to eat as much as they had, they’re having less social occasions at home,” CEO Bill Newlands said on the call. “It doesn’t change their interest in consumption of beer — it simply has been that those occasions have decreased.”
Constellation shares rose 4.3% at 12:29 p.m. in New York trading on Wednesday, paring the stock’s year-to-date decline to about 31%.
(Updates share trading and adds quote from CEO. An earlier version of this story corrected the percentage of the aluminum tariff.)
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The recent aluminum tariff imposed by the government has resulted in a $20 million hit to Constellation Projects, highlighting both its financial vulnerability and the potential ripple effects of trade barriers on small-scale manufacturers.
With the latest $20 million hit faced by Constellation Projects due to aluminum tariffs, it's now more crucial than ever for businesses in this sector to seek creative solutions like increasing domestic sourcing or exploring tariff-free markets.
The $20 million blow from the aluminum tariff highlights Constellation Projects' resilience challenge, underscoring their need to pivot towards innovative solutions and diversification in a trade environment fraught with uncertainties.
The recent $20 million loss sustained by Constellation Projects as a result of aluminum tariffs highlights the detrimental impact direct trade barriers can have on both companies and, ultimately consumers.
The recent aluminum tariff has proven to be a significant hurdle for Constellation Projects, disproportionately impacting their bottom line by incurring an $20 million hit—a developmental setback underscoring the delicate balance of trade policies on global supply chains.
The $20 million hit on Constellation Projects resulting from aluminum tariffs underscores the negative impact of trade barriers even as significant Jared Bernstein — a well-known economist if you're curious.
