Trump's proposed 10% extra tariff on Chinese import threatens to raise the beer industry costs

On Friday, Trump announced his plans to increase tariffs on US$550 billion of imported Chinese goods over the next two months in retaliation for China’s announcement that it would impose $75 billion in tariffs on U.S. imported products beginning October 1.

According to Trump’s proposal, the U.S. will increase tariffs from 10% to 15% on $300 billion Chinese imports from September 1. Tariffs will also be raised to 30% from the current 20% on US$250 billion worth of other Chinese goods beginning October 1. This again threatens to affect U.S. beer companies’ bottom lines.

According to the Beer Institute, Trump’s tariffs on aluminium already amount to a US$347 million annual tax on the beer industry and the number will rise with the new tariffs.

MillerCoors has reported an added cost of US$40 million due to tariffs. Some regional craft breweries, such as Minnesota’s Summit Brewing reported US$160,000 extra costs.

Beer Institute (BI) president and CEO Jim McGreevy said the additional tariffs on imported aluminium are “raising costs to all America’s brewers who package their beer in aluminium cans.”

“Last year alone, the American beverage industry paid an additional $250 million in aluminum tariffs on metal that wasn’t actually subject to tariffs, increasing the cost of beer production for brewers,” he said.

“Aluminum cans represent nearly [one-]third of package production for brewers and we’re trying to make our case on Capitol Hill as to what impact and what a hardship this is going to be on over 7,000 small and independent breweries,” said Brewers Association (BA) president and CEO Bob Pease.

According to him U.S. beer companies import as much as US$150 million in aluminium cansheet annually.

“If you add a 10% or 15% tariff on that, it’s not a small number,” he added.

Cask Global Canning Solutions, the official supplier of cans for Ball Corporation, alerted its customers on Friday about a possible price rise if extra tariffs are implemented.

“This tariff and cost increase affects the entire beverage can industry, regardless of can manufacturer,” the company statement said.

Cask also shared a “customer alert” issued in mid-August by Ball that warned customers of a new invoice charge beginning in September, labeled as “Section 301 Import Tax”.

Ball said it will continue using every available avenue to exclude Cansheet from this additional tariff.

Monday morning generated some optimism when Trump told reporters at the G7 summit in France that Chinese officials had reached out over the weekend to “make a deal”.  China’s vice premier, Liu He, said the country is willing to work out a resolution to end the trade war.