A recent report claims the U.S. collected more than $1 billion in revenue from steel and aluminum tariffs. Those duties were originally unveiled as a national security provision, but they’ve started to hit some U.S. sectors hard.
A batch of Hobnail craft beer came off a canning production line at the Southern Brewing Company in the city of Athens in Georgia. The line was installed just last year, but the company already can’t keep up with local demand.
Co-founder Rick Goddard said the aluminum import tariffs that were imposed by the Trump administration in March have made each can of beer more expensive to produce.
“Costs are definitely going up. We’ve seen that and our suppliers have run out of cans,” Goddard explained. “We were out of cans for a good four weeks until they were replenished. But not only is the cost going up on the can itself, but also the can lids which we buy in great quantity as well. So it is just digging us into a hole rather than digging us out of one.”
Situated some 70 miles away in Atlanta is the headquarters of soft drink giant Coca-Cola. With global production facilities, the company said it is well-positioned to handle the aluminum tariffs. Although in July, CEO James Quincey announced Coca-Cola would raise U.S. prices because of the issue.
“Aluminum is sort of in a mix of a number of different factors right now that are causing costs to rise in the U.S. and soft drink companies like Coca-Cola and PepsiCo are having to respond with pricing increases,” Executive Editor for Beverage Digest Duane Stanford said. “I think it fully hasn’t come to roost yet, in terms of causing major impacts to the soft drink companies, but if tariffs continue, then it could cause more pressure.”
The U.S. soft drink industry is big business. Last year, sales reached nearly $195 billion. While the U.S. beer industry is estimated to be worth over $111 billion in 2017. Craft beer sales makes up $26 billion of that total.
For beer and soft drink companies, big or small, the aluminum tariffs already appear to be having an impact on current operations. But given the tariffs also bring uncertainty, it’s led some companies to hold off from expanding.
“We were discussing getting a bigger canning line, demand is high. Do we expand? Do we hire more people to work a new canning line?” Goddard asked. “I know that there are over 6,000 breweries in this country. A lot of them use cans, and who is benefiting from these tariffs? Because I know that the brewing industry, which is one of the hottest industries in this country right now, is not benefiting.”
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