U.S. beer mak­ers are feel­ing the pinch of Trump’s tar­iffs

Richmond Times-Dispatch Weekend - - BUSINESS - BY EMILY RAUHALA

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.

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