CHAMPAIGN, Ill. — The ripple effects of increased tariffs under President Trump could extend to the $117 billion U.S. beer market, according to new research from a University of Illinois Urbana-Champaign agricultural economist who studies food supply chains.
While tariffs could stimulate increased domestic beer production, any gains in domestic market share would most likely be concentrated among a few multinational firms rather than the nearly 10,000 small, independently owned craft breweries, said Aaron Staples , a professor of agribusiness management.
“The beer industry is commonly divided into three segments: craft beer brewed by small businesses, domestic noncraft beer owned by multinational firms, and imported beer,” he said. “Tariffs can raise domestic beer production costs and the price of imported beer. When these costs are passed down to the consumer, it can influence beer purchasing behaviors. We wanted to gauge how consumers would respond to tariff-driven price increases and predict how it would impact each market segment.”
The paper, published in the journal Food Policy and co-written by Michael McCullough of California Polytechnic State University, examined the potential effects of tariffs on beer demand, market shares and consumer welfare.
Using experimental data from more than 700 U.S. beer drinkers, the researchers arrived at three key findings, each with policy implications and industry relevance:
While tariffs are not directly imposed on consumers, they can still have a discernible impact on U.S. beer drinkers for several reasons, Staples said. For example, the U.S. market share for imported beer has increased from 14% to 24% since 2013. Mexico alone accounts for approximately 83% of U.S. beer imports, meaning roughly one in five beers consumed in the United States comes from Mexico.
“Most Mexican beer was exempt from initial tariffs under the United States-Mexico-Canada Agreement, but there is now a 50% tariff on the aluminum content of imported beer,” he said. “If this cost is passed down the supply chain, consumers could pay higher retail prices for their favorite Mexican lager. Small international brands may also consider discontinuing distribution to the U.S. if tariffs render the decision unprofitable, thereby reducing product variety.”
In that scenario, the market share for imports could fall, and any gains to domestic beer production from tariffs “would primarily flow to the multinational companies that purchase ads during football games, not the small craft breweries that have become cornerstones of local economies,” Staples said.
“In fact, we’re already starting to see a shift in business strategies among some of the multinational firms,” he said. “From investments in new production plants to marketing beer as ‘American made’ rather than ‘domestic,’ multinational firms are playing up the nationalistic aspect of their beer.”
But the impact of tariffs is not isolated to imported beer. Tariffs can increase domestic beer production costs given the reliance on international trade for agricultural and nonagricultural inputs, including malt, hops, steel and aluminum.
When these inputs are taxed, the cost of domestic beer production increases.
“Businesses may try to absorb these at first, but there comes a point where some of these increased costs will eventually be passed along to consumers,” Staples said.
This is especially worrisome for smaller craft brewers, which operate on tighter profit margins and have limited supply chain flexibility, Staples said.
“The multinationals will likely have a better buffer to weather these cost increases brought about by tariffs,” he said. “They have economies of scale, hedge against market disruptions and can negotiate with suppliers due to their strategic positioning. The average craft brewer can’t do this, making them more susceptible to market disruptions.”
If craft brewers start to falter, it could have broader implications for local economies, Staples said.
“The impact of the tariffs might not be immediate. The effects could be delayed until the inventory on hand dries up or brewers decide they can no longer afford to absorb these added costs,” he said. “But once beer prices go up, we don’t typically see them come back down.”
Tariffs remain a central policy topic, and the legality of certain tariffs has recently been called into question, Staples noted.
“It’s a very fluid and uncertain situation overall, one that ultimately points to higher consumer prices and a shifting market landscape,” he said.
Food Policy
Data/statistical analysis
Not applicable
Tariffs and U.S. beer demand: How protectionist policies could impact market shares and consumer welfare
6-Oct-2025