Pat Nottingham, the local market manager for Milestone Brands, was proudly promoting Dulce Vida Organic Tequila and Empress 1908 Gin at the Colorado Restaurant and Bar Show at the Colorado Convention Center on Tuesday.
His mood took a turn when asked about the possibility that the on-again and off-again 25% tariff the U.S. has threatened on a host of goods coming out of Mexico and Canada might kick in for good on April 2.
The Austin-based company’s tequilas are distilled and bottled in Mexico and the company’s gin line comes out of Canada. Should tariffs restart next month, the company and its customers won’t be spared from taking a hit, he said.
The saving grace, if there is one, is that most of the company’s tequila bottles run in the mid-$20 range, which will make the dollar increase lower than tequilas sold at a higher price point, he said.
The cost of eating and drinking out in metro Denver, as measured by the Consumer Price Index from the U.S. Bureau of Labor Statistics, has remained stubbornly high even as many other items have moved lower.
Restaurant inflation was rising 5.8% on an annual basis in January, more than double the overall inflation rate of 2.3%. That follows a hot 9.1% rate in 2022, an 8% rate in 2023 and a 6.3% rate in 2024. Restaurants have been testing the breaking point of customers as they cope with higher food and beverage costs, higher labor costs and higher real estate and utility costs. Now they must wrestle with tariffs.
Conor Horan, a retail territory manager with Gourmet Foods International, said his company hasn’t taken a direct hit compared to importers trading goods from Canada and Mexico. The company distributes cheeses and other charcuterie products, supplying many of the items that sell under the Murray’s Cheese brand found locally at King Soopers. Most of its products come out of Europe, in particular France, Italy and Spain.
“A European tariff would not be good,” he said. Wisconsin producers might be able to step in with some substitutes on the cheese side, but their products would be a shadow of what the Europeans have mastered over centuries of making cheeses.
And as for stockpiling items at current prices, that layers on additional costs. While hard cheeses store well, soft cheeses are more perishable.
In the end, the added costs of tariffs will likely be absorbed up and down the supply chain, including by consumers. When asked what the company’s retailers expect, Horan said, “They expect us to adapt.”
Even small companies that source materials and market domestically aren’t immune from tariffs. Dave Wemple, vice president of sales at Mor Kombucha in Federal Heights, said the company relies on aluminum cans made by another Colorado company, Westminster-based Ball Corp.
Ball, however, relies on Canadian aluminum, which is under a new 25% tariff, part of a larger push by the Trump administration to spur more domestic production of metals considered vital to national security.
The province of Ontario retaliated with a 25% surcharge on electricity sold to Michigan, Minnesota and New York. That in turn met with a threat of 50% tariffs on Canadian aluminum, steel and cars.
On Tuesday, Ontario Premier Doug Ford agreed to end the electricity surcharge after U.S. Secretary of Commerce Howard Lutnick agreed to a sit-down to renegotiate the terms of the United States-Mexico-Canada Agreement or USCMA.
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