TARIFFS MAY SPILL OVER ON AUSTIN’S BREWERIES
Austin’s booming craft brewery scene could see its growth slowed by President Donald Trump’s decision to levy steel and aluminum tariffs on some U.S. allies.
Trump announced Thursday that Canada, Mexico and the European Union would be subjected to the tariffs, marking the latest move in an ongoing trade spat that has already prompted retaliation. The global tariffs — 10 percent on imported aluminum and 25 percent on steel — took effect March 23, but Trump exempted the allies until midnight Thursday amid negotiations.
Beer-makers in Austin and around the country have bemoaned the tariffs since their announcement in early March.
The aluminum tariff could produce a $347 million tax on the American beverage industry and result in the loss of about 20,000 jobs, according to the Beer Insti
tute, a national trade group representing brewers, importers and industry suppliers.
“Aluminum is the largest single-input cost for beer brewers. Whether you’re a large brewer or small brewer, if you’re putting your beer in cans it’s a very big cost for you,” said Jim McGreevy, president and CEO of the Beer Institute.
Austin Beerworks, one of Austin’s largest breweries, purchases around 5 million aluminum cans
per year at roughly 10 cents each. Michael Graham, co-founder of the North Austin brewery, said
the 10 percent tariff will cost his business $50,000 annually.
“That’s $50,000 less profit for us to reinvest in the business or to pay our people,” Graham said. “That $50,000 could equate to a new fermentation tank that would
... allow us to make more beer, or to make efficiency improvements on existing equipment.”
Josh Hare, founder and president of Hops and Grain Brewing in East Austin, said the aluminum tariff will further exacerbate the metal’s price volatility.
Reinvesting in the brewery will be difficult due to the uncertainty of the metal’s price-point, he said.
Hops and Grain, like many other beer-makers, also relies on stainless steel for its brewing process. Hare said his brewery contains about $1.5 million in stainless steel equipment.
“If you’re a brewery like ours or like Austin Beerworks that cans all their beer and makes all their beer in stainless steel equipment, basically everything that we use is now getting ... hit with a tariff,” he said.
The tariffs come just months after a federal tax overhaul that provided savings to small brewers across the nation.
Craft brewers producing no more than 2 million barrels annually had their federal excise tax halved under the bill.
McGreevy said many of the brewers represented by the Beer Institute planned to use the savings to hire more employees or make improvements to their facilities. But, since the announcement of the tariffs in March, he said brewers have seen their savings eroded by the price spike of imported metals.
The tariffs will essentially “wipe out” any savings Austin Beerworks received from the excise tax break, Graham said, and could drive up beer prices if left in place long-term.
“I think that’s sort of inevitable that increased cost of goods sold has to lead to increased price to the consumer to make up for it,” he said.