From The Brewers Association:
On March 8, 2018, the president signed a proclamation imposing a 25 percent tariff on steel imports and a 10 percent tariff on aluminum imports. The proclamation is the White House’s response to the Department of Commerce’s Section 232 investigation into whether the import of aluminum and steel is a national security risk. The proclamation provides exemptions for Canada and Mexico and gives other countries the opportunity to apply for exemptions. The tariffs are set to take effect on March 23, 2018.
The Brewers Association is concerned about both the aluminum and steel tariffs and the potential implications they will have on small and independent brewers. Though we think the more targeted tariffs exempting Canada and Mexico are a step in the right direction, we do not believe that can sheet aluminum or the steel used to make brewing equipment poses a threat to national security. The American craft brewing industry is a great example of strong American manufacturing. In the last year, the more than 6,000 breweries located across the United States have directly employed more than 130,000 people and contributed more than $73 million to charities. These small businesses are located in almost every congressional district in the country and the Brewers Association opposes any policy that could negatively impact this growing American industry.
Small and independent breweries that rely solely on canning could see a negative impact as a result of the proposed tariffs.
- Aluminum cans represent 28.5% of packaged production for brewers.
- Brewers that produce 10,000 bbl/year or less (more than 90% of breweries) are the largest growing segment of brewers that packages their beer in cans. The smallest packaging brewers would be the ones most directly impacted by a price increase.
- Cans are the top packaging method for new breweries (breweries that have been open for less than one year). They would be adversely affected by a spike in aluminum prices triggered by new tariffs.
- Although bottles remain the primary method of overall craft beer packaging, there is a continued shift toward cans. This shift has been driven partially by shifting package mix from brewers, but has been equally driven by growth dynamics wherein (smaller) brewers that use cans more are growing faster.
- Breweries make a significant capital investment when they decide to package their beer.
Higher steel prices will impact existing breweries, breweries in planning and breweries looking to expand.
- 99% of craft breweries have draft production.
- Draft production is 40% of craft sales.
- Kegs are made out of steel and will likely be impacted by higher prices.
- Keg theft has been a continuing problem in the brewing industry higher prices for steel could cause an increase in theft.
- Tanks and other equipment that are made from steel could see a price increase, directly impacting breweries in planning and breweries looking to grow.
- Keg and brewing equipment manufacturing has been a growing industry in the United States.
The Brewers Association would like to thank the 100+ Members of Congress who signed the letter to President Trump stating that imposition of tariffs would have unintended consequences. The Brewers Association will continue to work with a coalition of can manufacturers, large global multinational brewers, non-alcoholic beverage producers and Congress to address our concerns with the administration’s proposed tariffs in an attempt to mitigate the impact on our members.
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