A recent report shows the beverage industry took a $1.4 billion hit from aluminum tariffs since 2018, and a local business owner said several other factors are impacting prices, as well.
With roots dating to 1862, The Beer Institute is a national trade association for the American brewing industry representing brewers of all sizes, as well as beer importers and industry suppliers — an industry that supports more than 2 million jobs and pumps more than $331 billion into the U.S. economy.
New research conducted on behalf of the Beer Institute by HARBOR Aluminum, an independent authority on the aluminum industry and its markets, shows that since the Section 232 tariffs on aluminum took effect in 2018, the U.S. beverage industry alone has paid more than $1.4 billion in tariffs.
The research shows tariffs have driven up the price of aluminum because rolling mills and smelters are including the tariffs in their prices, regardless of whether the metal is subject to Section 232 tariffs. That means U.S. beer and beverage companies, along with many other users of aluminum, are being charged a higher price for the metal, driving up the cost of doing business in the U.S. and making consumer goods more expensive.
“With the cost of gas and groceries at record highs, American families and businesses are feeling the strain under the high costs of living,” said Jim McGreevy, president and CEO of the Beer Institute. “This new research shows the tariffs on aluminum continue to push up prices on American consumers and businesses.”
McGreevy and the Beer Institute say the fastest way to alleviate high prices impacting businesses and families would be to repeal the tariffs.
The report found between the implementation of Section 232 aluminum tariffs on March 23, 2018, and Feb 28, 2022, the U.S. beverage industry paid $1.416 billion in Section 232 tariffs on 7.1 million metric tons of aluminum. Of that amount, $111 million (8%) went to the U.S. Treasury. HARBOR Aluminum estimates U.S. rolling mills, U.S. smelters and Canadian smelters received $1.305 billion (92%) by charging end-users — such as U.S. brewers — a tariff-burdened price, regardless of whether the metal was tariffed based on its content or origin.
HARBOR Aluminum also estimated that in 2021 alone, the U.S. beverage industry paid $463 million in Section 232 tariffs. Of that $463 million, only $15 million (3%) went to the U.S. Treasury, while $448 million (97%) went to U.S. rolling mills, U.S. smelters and Canadian smelters.
There are more than 13,300 permitted breweries in the U.S. supporting more than 2 million American jobs. Imported primary aluminum and can sheet are critical to the U.S. beer industry, as more than 74% of all beer produced in the U.S. is packaged in aluminum cans and bottles, the Beer Institute said.
In 2020, brewers bought more than 41 billion aluminum cans and bottles, making aluminum the single-largest input cost in American beer manufacturing.
Dennis Grumm is founder, CEO and engineer at Grand Rapids-based Oktober Can Seamers, whose flagship product is a hand-operated machine that cans one beer — or wine, cider, seltzer, kombucha or wellness drink — at a time. The company also sells cans by the pallet as a service for its clients, who otherwise would have to buy cans by the truckload, a cost that would be prohibitive to smaller operations.
Grumm said his company buys cans directly from American manufacturers who buy the raw materials to make them, so he doesn’t have direct knowledge of how tariff costs are impacting prices, but he does know that the price of some of the cans he buys for resale went up by about 10%, a cost he then had to pass on to his beverage industry customers in April.
He said additional factors besides tariffs are causing the price inflation for the beverage industry, such as the cost of shipping rising by double to quadruple during the pandemic, supply chain bottlenecks that only now are easing, increased labor costs, manufacturers now requiring larger bulk orders of cans — up to four truckloads at once rather than one — and Bell, the biggest U.S. can manufacturer, cutting off direct sales and forcing breweries to purchase cans through a distributor.
“That adds a lot to the price of a can of beer at the end of the day,” he said. “It’s definitely significant, but I’m hoping these problems don’t just keep getting worse and worse. I don’t see any reason why they would, and I haven’t heard any expectations of another big jump-up in the future.”
Grumm said along with the increased price of aluminum cans, the cost of pretty much every raw material used to make Oktober Can Seamers’ canning equipment — including stainless steel — has increased, and so have transportation costs.
“We’ve been fighting that for awhile,” he said.