Tariff Trouble

22 Jun

Let me make one thing perfectly clear: This is in no way a political post. It’s merely a report on something that will affect beer-drinkers across the nation. The topic? The tariffs President Donald Trump has placed on imported aluminum and steel. The 10 percent tariff on aluminum and 25 percent tariff on steel means that many items-from beer cans to brewing equipment-are likely to see a price increase that will eventually trickle down to consumers, i.e., us.

The issue doesn’t affect craft beer alone. Monolithic brewers, like Miller/Coors, Anheuser-Busch/InBev, Heineken, etc., will be adversely impacted by spikes in aluminum and steel prices sure to follow the tariffs.

The Beer Institute, a Washington, D.C. trade association that advocates for brewers large and small, estimates the tariffs’ economic slam on the brewing industry could result in the loss of more than 20,000 American jobs.

“Aluminum is critical to the well-being of America’s beer industry, as more than half the beer produced annually is packed in aluminum cans or aluminum bottles,” wrote Beer Institute President and CEO Jim McGreevy, in a release condemning the tariffs.

The Brewers Association (BA), a trade group that advocates for craft breweries, similarly responded to Trump’s action in a press release, stating, “The Brewers Association is concerned about both the aluminum and steel tariffs and the potential implications they will have on small and independent brewers.”

The BA also released statistics revealing how the new tariffs may imprint the nation’s more than 6,000 craft breweries. According BA data, 28.5 percent of beer produced in the U.S. is packaged in aluminum cans. Of the breweries producing that 28.5 percent, more than 90 percent make fewer than 10,000 barrels a year. And most breweries less than a year in operation prefer canning to bottling. Both would be hit hardest by higher aluminum prices.

In a CNN interview, Commerce Secretary Wilbur Ross said the tariffs would be “no big deal,” with a negligible cost increase, at just pennies on the can.

Those pennies add up, though.

Further investigation by the BA found that more than 115 billion aluminum cans were produced here last year. A one-cent increase per can could cost the industry $960 million, costs that’ll be passed down to customers, including the beer industry, and eventually the end consumer.

Oskar Blues, the first craft brewery to can its beer, estimates the tariffs may cost it $400,000 a year-1 percent of the company’s 2017 revenue. A bottom line hit like that makes it risky for even a larger craft brewery like Oskar Blues to expand, add jobs or make improvements.

Beer giant Miller/Coors took to one of Trump’s favorite forums, Twitter, to issue a statement. “We are disappointed with President Trump’s announcement of a 10 percent tariff on aluminum … . Like most brewers, we are selling an increasing amount of our beers in aluminum cans, and this action will cause aluminum prices to rise.”

The actual effect the tariffs will have on craft brewers-and consequently beer-drinkers-isn’t yet known, but speculation and tension are clearly rampant.

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Posted by on June 22, 2018 in Beer


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