Tariffs are coming for America’s favorite beer—but Modelo maker says it’s Trump’s immigration crackdown that’s hurting sales

• Constellation Brands, the maker of Modelo, warns that while new tariffs on imported beer cans will raise costs, it is President Trump’s immigration crackdown that is already driving down sales by deterring Hispanic consumers, leading the company to lower its sales outlook.

Constellation Brands, the U.S. importer of Modelo and Corona beer, is blaming more than tariffs for slowing beer sales—it’s pointing to immigration fears as well.

Modelo, which overtook Bud Light last year to become the nation’s bestselling beer, saw its quarterly beer sales to retailers fall for the first time in more than a decade—a reversal Constellation attributes primarily to declining demand among Hispanic consumers, who make up about half of Modelo’s U.S. customer base.

“If that consumer has concerns, issues, et cetera, that’s a big deal for us,” CEO Bill Newlands told the Wall Street Journal, pointing to heightened fears among Latino shoppers in the wake of stepped-up immigration enforcement.

In key markets like Southern California and Texas, many immigrants are avoiding local liquor stores and smaller retailers in Hispanic neighborhoods, instead shifting to larger chains that are less likely to be targeted for immigration enforcement, according to analysts and distributors.

Social gatherings—typically a stronghold for beer sales—are also on the decline as Hispanic consumers pull back from public events and nighttime outtings, further weighing on demand.

“Many consumers within the Hispanic community are quite apprehensive at this moment,” Newlands said. “Social events, which are typically occasions where Hispanic consumers enjoy beer, are currently on the decline due to these overarching worries.”

Trump tariffs could cost Constellation up to $1 billion

The pressure comes as Constellation braces for the financial impact of Trump’s newly imposed tariffs, which slapped a 25% levy on all imported canned beer and empty aluminum cans, effective April 4.

While Modelo, Corona, and Pacifico themselves are exempt from tariffs on Mexican imports, the cans they come in are not, potentially adding up to $1 billion in annual costs for the company.

According to the most recent earnings report, Constellation’s beer portfolio, which includes these Mexican imports, accounted for 78% of its net sales last quarter.

The company has responded by trimming its earnings and sales forecasts for the coming years, projecting flat to modest growth in beer sales for fiscal 2026 and lowering its medium-term outlook to 2%–4% annual sales growth, down from prior estimates of 6%–8%.

Shares of Constellation are down 17% year to date, even as the company beat Wall Street’s expectations for its latest quarterly earnings, and recently welcomed a $1.24 billion investment from Warren Buffett’s Berkshire Hathaway.

While tariffs threaten to push prices higher in the months ahead, Newlands says the more immediate threat is the effect of immigration enforcement on the Hispanic community.

As summer approaches—a crucial season for beer sales—Constellation and its distributors are “battening down the hatches” and hoping that prices can hold steady until consumer confidence returns.

This story was originally featured on Fortune.com