Food, Beverage Industries Fight Proposed Tariff

A 10% tariff on aluminum would cost beer and beverage producers $256.3 million.

President Donald Trump announced plans on Thursday, March 1, to place a 10% tariff on aluminum imports. He plans to make a final decision on the tariff by April 11, according to a report by Reuters.

Between January and October last year, the U.S. imported more than 5.7 million tonnes of aluminum, a rise of 18% over the same period in 2016, according to the U.S. Commerce Department.

- Advertisement -

In January, the Commerce Department sent the White House results of its 232 investigation examining the national security impacts of aluminum imports. CEOs from some of America’s leading food and beverage companies and trade associations responded by joining the American Beverage Association, Beer Institute and Can Manufacturers Institute in sending a letter to President Donald Trump in February, requesting that he refrain from imposing tariffs or import restrictions on cansheet, primary aluminum and scrap.

The letter noted a 10% tariff on aluminum would cost beer and beverage producers $256.3 million, a 20% tariff would cost $512.5 million and a 30% tariff would run $768.8 million.

“Imposing an artificial price hike on American companies that employ millions of people will weaken the economy and hurt working families by raising prices, costing jobs and reducing incomes unfairly,” said Susan Neely, American Beverage Association president and CEO. “Tariffs on our companies’ imports of primary and cansheet aluminum will greatly increase our manufacturing costs and harm many more workers than it helps.”

“Imports of primary aluminum and cansheet used to manufacture beer cans do not threaten national security,” said Jim McGreevy, Beer Institute president and CEO. “Aluminum is critical to the beer industry and its employees, since more than half of the beer produced annually are packaged in aluminum cans or aluminum bottles. Any trade restriction on primary aluminum or cansheet imports would disrupt the market and increase costs to brewers and beer importers as aluminum customers.”

“The administration should take into consideration the unintended consequence of a trade action against aluminum cansheet and primary aluminum that would ripple across the supply chain. Like most industries, can makers depend on predictability in supply and price. If the aluminum supply is hindered by unnecessary tariffs or trade restrictions, it could lead to supply inefficacies and affect product availability,” said Robert Budway, Can Manufacturers Institute president. “Even a small tariff will result in greater uncertainty about prices, supply, financing and would dramatically curtail investment and hiring in the United States.”

Canada is the biggest supplier of aluminum to the U.S. with about 2.48 million tonnes, which could derail Trump’s plan. Reuters noted that Canadian aluminum is important for the U.S. defense industry and the Commerce Department previously pointed out: “the U.S. and Canadian defense industrial bases are integrated,” a relationship that “has existed since 1956 and is codified in a number of bilateral defense agreements.”