Speaking at a public hearing investigating the effects of steel imports on US National Security last month, Robert Budway, president, CMI, said putting a tariff on tinplate steel would put food and beverage cans at a disadvantage among competitive packages.
Competing packaging materials
“This proposed tariff or restriction would disadvantage the food can manufacturer versus competing packaging materials, such as plastic and glass, which are not subject to tariffs,” he said.
“Even a small increase in the price of raw materials would create a destructive competitive disadvantage, forcing possible closures of can manufacturing plants in the United States and negatively impacting the 10,000 workers and their families in these US-based plants.
“One could easily foresee where finished cans or even cans with food products made overseas could be imported at lower costs than US produced cans.”
The dominant issue is that US tinplate steel production does not meet domestic demand.
In 2016, US demand was 2.1 million tons, while domestic tinplate production was 1.2 million tons, which means only 58% of domestic demand can be met by US tinplate producers.
Approximately 25% of all steel is tinplate and there has been a decline in the quality of domestic tinplate.
“The rejection rates of domestically produced tinplate are approximately 300% to 500% higher versus foreign suppliers," said Budway.
He added the majority of steel cans are used for canned food, which offers an affordable way towards feeding the nation and access to affordable nutrition is vital for the 42 million Americans that live in food insecure households, including 13 million children.
He highlighted as well the people who live on government food assistance, including the USDA Supplemental Nutrition Assistance Program (formerly known as food stamps), who consume canned fruits and vegetables at a higher rate than the average American, at a cost of 20% less than fresh food.
“Tariffs or any trade barriers would have harsh consequences for those less fortunate,” said Budway, “and diminish the value of taxpayer-funded federal food assistance programs.”
“For all of these reasons, we ask the Commerce Department to keep American can manufacturing competitive and exclude tinplate products from this investigation or any future tariffs or actions against this important product.”
CMI is the national trade association of the metal can manufacturing industry and its suppliers in the US.
The can industry accounts for the annual domestic production of approximately 124 billion food, beverage and other metal cans; which employs more than 28,000 people with plants in 33 states, Puerto Rico and American Samoa; and generates about $17.8bn in direct economic activity.