U.S. beer makers are feeling the pinch of Trump’s tariffs
For American brewers, metal tariffs are a bit of a buzzkill.
This summer, as the United States, Canada and Mexico tried to cut a new North American trade deal, President Donald Trump slapped tariffs on foreign steel and aluminum.
More than a month after the countries reached a provisional agreement for the U.S.-Mexico-Canada Agreement, or USMCA, the tariffs are still in place.
Canadian industry has been bruised, but so have a number of U.S. businesses, including beer.
In a vivid example of how Trump’s trade tactics abroad can hurt business at home, the U.S. beer industry, which needs aluminum to make cans, is seeing costs rise.
Brewers say the math is simple: As tariffs roil the market, sending prices up, the cost of producing each aluminum can increases.
The Trump administration has played down the impact. In a television appearance in March, Commerce Secretary Wilbur Ross called the cost increase “no big deal.”
“If that goes up by 25 percent, that’s about sixtenths of one cent,” he said. “Who in the world is going to be too bothered by six-tenths of a cent?”
The Beer Institute, a U.S. trade group, says brewers are bothered. It projects that over a year, tariffs on foreign aluminum could raise the cost of beer production by $347 million.
The industry has found common cause with Canadians and others, calling on the Trump administration to scrap the tariffs before the signing of the U.S.-Mexico-Canada trade deal, which may come at the end of the month.
“We’d like to see these tariffs repealed,” said Jim McGreevy, president and CEO of the Beer Institute.
“We were hoping that the renegotiation of
NAFTA would have taken the steel and aluminum tariffs off the table, but all indications are that the tariffs will continue,” he said. “And that does not bode well for American beer.”
The impact is already being felt, said Ryan Krill, co-founder and CEO of the Cape May Brewing Co., a small brewery in southern New Jersey.
Krill, who started his business in 2011, says rising aluminum prices will cost him $30,000 this year — a big sum for a small team.
“We could get a lot miles out of that,” he said.
The uncertainty may prevent Krill from reinvesting in his business until the long-term impact of the tariffs becomes clear.
To understand why U.S. beer is having a bummer year, look to the aluminum market — and to Trump.
In March, the president announced a 25 percent tariff on foreign steel and a 10 percent tariff on aluminum. The administration said reliance on foreign metals threatens U.S. national security, and wanted to put pressure on China, a leading producer of aluminum, to change its trade practices.
Though many U.S. businesses support taking a tough line with Beijing, members of Trump’s Cabinet, economic advisers and industry groups warned that tariffs would create uncertainty and increase costs for U.S. companies that import goods.
Initially, Canada, Mexico and the European Union were granted exemptions. But during negotiations this summer, Trump changed course, saying publicly that the move was meant to gain leverage over Canadian Prime Minister Justin Trudeau.