BBC: 'Is it for a day or four years?' Tariff uncertainty spooks small businesses

Donald Trump's talk of applying new tariffs to goods from America's biggest trade partners has sparked months of uncertainty for business owners.

On Saturday, the president made good on his threats, ordering a new 25% tax on shipments from Mexico and Canada and raising existing tariffs on goods from China by 10%.

But that has not stopped the questions.

"Is it for a day, is it a political flex or is it something that will last for four years?" asked Nicolas Palazzi, the founder of Brooklyn-based PM Spirits. He runs a 21-person business that imports and sells wine and spirits, about 20% of which come from Mexico.

Trump's orders set in motion threats that the president has discussed for months, striking at shipments from America's top three trade partners, which together account for more than 40% of the roughly $3tn goods the US imports each year.

Canadian oil and other "energy resources" will face a lower 10% rate. But otherwise, there will be no exceptions, the White House said.

Trump said the tariffs were intended to hold Canada and Mexico accountable for promises to address illegal immigration and drug trafficking.

The measures go into effect on 4 February and are to remain in place "until the crisis is alleviated," according to the orders.

If the plans were not a surprise, they still presented a potentially stunning blow to many businesses, especially for those in North America. The three countries have become tightly linked economically after decades of free trade under a treaty signed in the 1990s, known then as Nafta and updated and renamed under the Trump administration to USMCA.

The growth of mezcal in the US, brought in by businesses like Palazzi's, has been part of this shift.

Since 2003, consumption of tequila and mezcal has roughly tripled, increasing at a rate of more than 7% each year, according to Distilled Spirits Council, a trade group.

Overall since the 1990s, trade in spirits between the US and Mexico has surged by more than 4,000% percent, said the organisation, which issued a statement after the president's announcement warning that the tariffs would "significantly harm all three countries".

For months, Palazzi has been fielding nervous questions from his suppliers in Mexico, who are typically small, family owned businesses and may not survive if the tariffs are prolonged.

If it sticks, he said the 25% tax on the bottles of mezcal, tequila and rum he brings in will push up prices - and sales will drop.

"Definitely this is going to impact the business negatively. But can you really plan? No," he said. "Our strategy is roll-with-the-punches, wait and see and adapt to whatever craziness is going to unfold."

Economists say the hit from the tariffs could push the economies of Mexico and Canada into recession.

Ahead of the announcement, Dan Kelly, president of the Canadian Federation of Independent Businesses, described the looming tariffs from the US, and expected retaliation, as "existential" for many of his members.

"Look, we get that the government has got to respond in some fashion …. But at the same time we urge the government to use caution," he said, comparing tariffs on imports to chemotherapy: "It poisons your own people in order to try and fight the disease."

"It's going to have an effect everywhere," said Sophie Avernin, director of De Grandes Viñedos de Francia in Mexico, noting that many Americans own Mexican alcohol brands and Modelo beer is actually owned by a Belgian company.

Trump, who has embraced tariffs as a tool to address issues far removed from trade, has dismissed concerns about any collateral damage to the economy in the US.

But analysts have warned the measures will weigh on growth, raise prices and cost the economy jobs - roughly 286,000, according to estimates by the Tax Foundation, not including retaliation.

Those in the alcohol business said the industry had already been struggling to emerge from the shadow of the pandemic and its after-shocks, including inflation, which has prompted many Americans to cut back on dining out and drinking.

Smaller firms, who typically have less financial cushion and ability to swallow a sudden 25% jump in cost, will bear the brunt of the disruption.

"I'm pretty frustrated," said California-based importer Ben Scott, whose nine-person business Pueblo de Sabor brings in brands from Mexico such as Mal Bien and Lalocura.

"There's just a huge cost that's going to affect so many people in ways other than they're paying a couple bucks more for a cocktail, which doesn't sound like a tragedy."

Fred Sanchez has spent years pushing to expand his business, Bad Hombre Importing, a small California-based importer and distributor of Mexican agave-based spirits like Agua del Sol, and was recently working on deals in New York and Illinois.

But his potential partners started hesitating as Trump's tariff talk ramped up last year.

Now, instead of expanding, he is contemplating selling off his stock of liquor and possibly shutting down. He said he had little capacity to absorb the jump in costs and saw little scope for raising prices in the current economy.

"25% is just not something that we can realistically pass onto the consumer," he said.

Sanchez said he believed that Trump might be using tariffs as a negotiating tactic, and the tax could be short-lived. Still, for his business, damage is already done.

Vinepair: Puntas — a High-ABV, Hyper-Traditional Style of Mezcal — Is Going Commercial

It was at the end of a tasting at Eli’s Mezcal Room, an underground mezcal tasting experience located in a local man’s New York apartment, when host “Eli” (not his real name) pulled out one final bottle he thought might interest me: an unlabeled plastic water bottle he had suitcased back from Mexico. It was extraordinarily aromatic and I could smell its vegetal, medicinal notes the second the Poland Spring’s lid was unscrewed. It likewise had a rich, intense, burning flavor — no surprise as it was nearly 70 percent ABV.

When alcohol comes off a still, the distiller cuts it into three parts, each descending in alcohol content, and generally referred to as the heads, the heart, and the tails. The most toxic elements, like methanol, are concentrated in the heads and tails, meaning many distillers across all spirits categories only bottle the hearts to be safe.

But this special mezcal Eli had served me was actually composed of all heads, which, besides methanol, also possess some incredibly aromatic, flavorful compounds like propanol, ethyl lactate, acetic acid, and furfural.

Though formerly the (strictly non-exported) handiwork of hyper-traditional mezcal, of late, puntas offerings are becoming increasingly commercialized and the category has even infiltrated the tequila world.

Puntas on the Palenque

Until recently, most Americans who would have tried puntas (the Spanish word for points, a synonym for heads) probably did so in a similar way to what I did. There aren’t really any commercial examples of it and, quite frankly, bottlings like the one I tasted might not even be legally allowed to be sold in this country for a variety of reasons.

“It’s definitely much more common to find it at the palenque (mezcal distillery),” says Noah Arenstein, who runs the mezcal program at The Cabinet in New York’s East Village. “Because either it’s being used to blend back into the final mezcal and adjust the ABV and flavor … or they’re saving it to drink for themselves.”

If The Cabinet has one of the world’s largest mezcal collections, the bar only has a few commercial examples of puntas. Indeed, Mezcal Reviews, an online database with over 1,800 mezcals listed, has only cataloged 11 puntas bottlings over the years.

La Venenosa, raicilla Puntas

La Venenosa Racilla Puntas is the first example Arenstein recalls seeing on shelves, circa 2016. (While also agave-based, raicilla is not the same as mezcal or tequila.) Cinco Sentidos shipped its first batch of Puntas de Espadín to the U.S. market in 2021. Two years earlier, Mal Bien had started offering Madrecuixe Puntas, which the producer called “the platonic ideal that we imagine spirits to be. Agave, boiled down to its very essence, the plant stripped of everything but its soul.”

“This was always something we would produce at the distillery, ever since we started producing in 2007.”

Cinco Sentidos espadín Puntas

Arenstein finds all the puntas releases have a unique, specific taste. “You get almost a hand sanitizer note,” he says. “You put it on your hand and it evaporates like, you know, a hand sanitizer without lotion would. It has a lightness and kind of effervescence to it.”

If that doesn’t sound too appealing, there’s the somewhat taboo aspect of drinking puntas to consider. Haven’t we long been told that heads are solvent-y in taste and dangerous to drink — not only high in ABV but high in methanol content. And can’t that make you go blind?!

“If I’m pouring puntas for someone I will sometimes preface it with that,” Arenstein says. While a well-cut puntas is certainly safe to drink in small portions, Arenstein admits he has definitely encountered mezcaleros (distillers) with a cloudy-eyed look that has made him wonder, if not concerned.

The Distiller’s Cut

Admittedly, any concerns Arenstein has are not enough to stop him from drinking delicious examples of the style as more and more expressions hit the market. And it’s not just mezcal (and raicilla) producers now sending puntas expressions stateside.

“I think distillation can get really complicated and geeky to the average person,” Estes says, “so we wanted to help people understand what makes this different and unique and special.”

The first release, produced from agave from the La Ladera estate, and distilled at La Alteña, which has been the Camarena family’s distillery since 1937, was cut at 64 percent ABV, though diluted with water to 101 proof. (While a traditional mezcal puntas would never be diluted, tequila can’t legally be bottled in America at higher than 110 proof or 55 percent ABV.)

It quickly became a cult hit, well reviewed on sites like Tequila Matchmaker where it currently scores a crowd-sourced average of 90 among the site’s community. It was also most mainstream tequila drinkers’ first introduction to the old mezcal term puntas. (In Jalisco, distillers use the more literal translation for heads: cabezas.)

“There’s bad borrowing that’s happening from the mezcal world and there’s some good borrowing. And in a way this feels like a good borrowing,” Arenstein says, referring to Ocho’s use of the term. (Estes is quick to note that Camarena’s great-grandfather was making what was known as “vino de mezcal” well before tequila was even a term or category.)

Los Angeles Times: A mecca for mezcal: These are the best agave bars in L.A.

“You’ve got to put a bottle of mezcal on the ofrenda,” says Ivan Vasquez, owner of Madre Oaxacan Restaurant & Mezcaleria, with four locations across L.A. County and the largest small-batch mezcal collection in the U.S. “For me, and back in the villages, a bottle of mezcal has to be there.

“On Día de los Muertos, you drink a copita with your loved ones,” Vasquez instructs. “It’s the only spirit that keeps our loved ones alive. When I drink mezcal on Día de los Muertos, I’m reunited with my grandpa. Thanks to him, I was introduced to mezcal.”

While tequila has had a couple centuries to gain an international following, the rise of mezcal and regional spirits like sotol and bacanora is more recent. It was only in the ‘90s that mezcal gained Denomination of Origin (DO) status, which restricts legal and commercial use of the word, and paved the way for it to be sold across the globe.

The spirit, which imparts earthy tasting notes, exploded in popularity over the pandemic, partially because of the heritage involved — mezcal producers, or mezcaleros and mezcaleras, often utilize methods that have been honed across generations and are unique to their family or village. The final product, Vasquez says, delivers a flavor that can be more layered and complex than wine.

Also known as maguey, the spiky agave plant has been revered by Indigenous Mexicans for millenniums, providing food, practical items such as rope and sandals and fermented beverages like pulque. When Spanish colonizers arrived with the still, agave wine was distilled into spirits like tequila, made exclusively from agave tequilana, and mezcal, which can be made from over 40 other agave types.

“Los Angeles is like the mecca right now for agave distillates,” said Rocío Flores, a mezcalera who grew up splitting time between L.A. and Jalisco and now hosts agave tastings and educational experiences, including the program at Guerrilla Tacos. “It’s probably the one place in the world where you can find the most diverse, the most amazing mezcals that you can’t even find in Mexico in one place all together.”

The global appreciation for Mexico’s ancestral spirits has influenced the tequila industry too. For his part, Vasquez only works with small producers and serves tequila blanco exclusively — no reposados or añejos. When customers ask for corporate brands like Casamigos, he and his staff use it as an opportunity to educate.

“I tell them, ‘Let me bring you several options that are higher proof at a lower price’ and I ask them to enjoy it neat,” he says. “They’re just amazed when they try it.”

L.A. was already a great place to drink agave distillates, but these days the options are overflowing. Included on the list below are agave-focused bars that prioritize stocking small-batch producers and offer flights that encourage imbibers to sip in the traditional style. Some, like Vasquez, even sell rare bottles out of their bars. Whether you’re toasting in celebration or stocking up to savor with your ancestors on Día de los Muertos, these are the best agave bars in Los Angeles.