Trump’s plan to tax aluminium import may hit the US beer industry hard

Donald Trump’s administration is making an effort to save the US aluminium industry and its jobs by imposing tax on cheap aluminium imports. However, on the flip side, this extra tax on aluminium will be passed on to the end users and may raise the beer prices.  Tim Weiner, the senior commodity risk manager at Molson Coors Brewing Co. and its MillerCoors LLC unit has expressed this observation during Harbor Aluminium Outlook Summit in Chicago last week.

 “If there are duties on aluminum coming to this country, it will obviously get passed on to us and the customer,” he said, “Our prices will go up.”

The brewer’s view comes in contrast to primary producers like Century Aluminum Co who have been very enthusiastic at the prospect U.S. authorities undertaking action against unfairly priced cheaper imports. Following up a World Trade Organization complaint filed by the Obama administration in January, Trump signed an executive memorandum in April, which confirmed the initiation of an investigation into unfair aluminium imports. This was a part of Trump’s agenda to revive the jobs in the domestic manufacturing and industrial sector.

Weiner said that if Trump goes ahead with duties on primary aluminium import, it will affect the roughly 5,000 brewers scattered across every regions on the US, as about 60% of the brewer’s packaging is done in light and recyclable aluminium can.  He also expressed his concern on the nature and purpose behind the implantation of such duties.

“It depends on whether it’s politically motivated, or business motivated. I think there’s political motivation for putting some tariffs on.”

MillerCoors operates a large brewery in Fort Worth with more than 545 workers and produces numerous Miller and Coors labels as well as beers brewed for Pabst and Foster’s. 

Weiner said that they cannot change the mode of packaging if the material gets costlier. “We’re giving our customers what they want, and what they want is cans.”

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Aluminium has rallied 13% in 2017, registering the best performance among major industrial metals and this has eased some of the pain incurred by US producers due to increased imports. That has also encouraged Century toward restarting some production at a Kentucky smelter, as said by CEO Mike Bless in an interview at Harbor Aluminium Outlook Summit.

This year’s Harbor conference highlights the standing Section 232 investigation to determine the intensity of the alleged damage of foreign aluminium to U.S. manufacturers and its chances to threaten national security.