New US tariff on aluminium cans, beer and automobiles: who will shoulder the burden between exporters and consumers?

In 2024, the United States imported beer worth USD 7.5 billion, with Canada being the largest exporter, supplying USD 6.3 billion worth. The Netherlands followed with USD 683 million, Ireland with USD 192 million, and Mexico with USD 73 million. This raises two-sided concerns: Will the tariff-impacted countries pay the additional duty and continue exporting? Or, will the US domestic beer consumers pay inflated costs for imported goods?

The same concern applies to empty aluminium cans: whether the exporting countries will keep shipping cans despite the higher tariffs and whether the US companies will bear the increased costs. The question then becomes: will this move, which Trump believes is aimed at strengthening the domestic economy, ultimately end up costing Americans in the long run?

In 2023, the United States imported USD 411 million worth of aluminium cans, with top suppliers including Mexico, Canada, Germany, China, and France. With the implementation of this new tariff, will imports remain steady, or will they decline?

Automobile industry has no chill, either!

The global automobile industry, long dependent on the appeal of affordable, economy cars in the US market, is now likely to see a shift with the new 25 per cent tariff on cars assembled outside the US. The tariff will also apply to imported car parts, raising the cost of cars assembled domestically.

However, North American allies Mexico and Canada will receive partial exemptions under free trade agreements for components such as engines, transmissions, and batteries that are made in the US and later installed in vehicles produced in Mexican and Canadian factories.

Despite these exemptions, the automotive tariff will cover more than USD 460 billion of US vehicles. In addition, the tariff will also cover automotive computers, which are essential components of every modern car and truck. This particular category had imports of $138.5 billion in 2024, according to US Census Bureau data.

Consequences?

The sticker price will increase as most of the cars roll out of the US factories contains components made abroad.  For example, according to the National Highway Traffic Safety Administration, some Mercedes-Benz cars made in Alabama have engines and transmissions imported from Europe. However, the impact will be most seen on cars manufactured aboard like Toyota Prius made in Japan or Porsche sports cars made in Germany. Relatively, Tesla Model Y or Honda Passport will have to pay lower tariffs as they contain components made in the domestic market.

Last year, major Japanese carmakers exported almost 880,000 units of vehicles to the United States, according to data from Mexico's national statistics agency. While Toyota's Tacoma pick-up was the most exported model, Nissan had the biggest share of any automaker, accounting for more than a third, with 327,000 vehicles, showed the official data.

James Hong, head of mobility research at Macquarie, reckons tariffs, if fully passed on to consumers, will mean in practice an increase of 20 per cent because duties are calculated on the vehicle transfer price, rather than the retail price. Still, 20 per cent is a considerable sticker shock for the buyers already grappling with inflation.  

Senior Trump administration officials further clarified that these auto and auto parts tariffs are subject to the Section 232 national security and they do not stack on top of the new reciprocal duties, which are set after evaluating trade deficit in the countries that have faced reciprocal tariffs.  While China faces 34 per cent discounted reciprocal tariffs, Vietnam faces 46 per cent, India 26 per cent, Thailand 26 per cent, and South Korea 25 per cent.

So, to reiterate the question: who will bear the burden—exporters from overseas or consumers in the US market?