The President announced yesterday that the US would immediately begin imposing a 25% tariff on steel and aluminum imported into the country. Unlike the recent threat of tariffs on Canada and Mexico, which were largely seen as a negotiating tool and political postering, the tariff on steel and aluminum are expected to remain in effect indefinitely and will likely have a significant cost impact on alcohol beverage manufacturers.
Canada and the European Union received exemptions from tariffs that were initiated in 2018, which are still in place today, but the President has said that those countries will not be exempt from the current tariffs.
The U.S. imports more aluminum from Canada than from any other country and the newest round of tariffs will certainly increase prices on aluminum products. According to the Brewers Association (BA), aluminum cans now account for approximately 75% of packaged craft beer volume and revenue. The price of cans will go up, increasing the packaging costs for small and large brewers.
Canada and Mexico are the two largest suppliers of steel to the U.S., meaning that 25% tariffs could have a significant impact on the price of steel products used by brewers such as kegs, steel tanks, brewhouses and even packaging lines.
Retaliatory tariffs are also a concern. Canadian consumers have already begun boycotting American alcohol products and according to the BA, Canada imports 37.5% of American craft beer exports, making it the craft brewing industry’s largest export market.
See more details from the BA here.