President Donald Trump announced a new tariff Thursday that beer producers and other beverage companies say will drive up their production costs by more than $250 million annually.
Slated to go into effect next week, the tariff imposes a 25 percent tax on all foreign imports of steel and a 10 percent tax on foreign imports of aluminum. It’s intended to encourage U.S. production of those materials, but beverage companies that produce canned drinks say such a high aluminum tariff will deal their industry a blow.
MillerCoors, one of the U.S.’s largest beer producers, released a three-part statement on Twitter shortly after Trump’s announcement. The tariff will likely force MillerCoors and other beer companies to lay off workers, it said, hinting that the cost would be passed on to consumers.
Khawaja Mamun, chair of the business and economics department at Sacred Heart University, said the beverage industry isn’t exaggerating the likely negative effects of the new tariffs.
“The tariffs will benefit steel and aluminum producers ― the people who actually make it ― but the people who use steel and aluminum to make other products will get hurt,” Mamun told HuffPost.
He also predicted “the price increases are going to hurt consumers,” noting that “if a beer company has to raise prices to match demand, consumer demand will be reduced as the product gets more expensive.”
Mamun said it’s certainly possible that beer companies will lose hundreds of millions of dollars and shed jobs, as MillerCoors argues.
“Yes, surely [they will lose money],” he said. “Any policy helps one group and harms the other group. In this case, the harm will outweigh the benefit as a total.”
Several beverage companies, including MillerCoors’ parent company Molson Coors, signed a letter to Trump early last month urging him not to place a tariff on aluminum imports, particularly the types known as cansheet, primary aluminum and scrap.
“A tariff or quota will immediately disadvantage these domestic businesses since foreign competitors would have the advantage of not paying an artificially inflated raw cost,” the letter read. “We estimate a tariff of 10 percent on this aluminum would cost beer and beverage producers $256.3 million, a 20 percent tariff would cost $512.5 million and a 30 percent tariff would run $768.8 million.”
The letter was cosigned by more than a dozen companies and industry groups, including the Can Manufacturers’ Institute, Heineken and Coca-Cola.