US beverage industry dismayed over proposed 10% aluminum tariff

By Mary Ellen Shoup

- Last updated on GMT

The beverage industry has urged President Trump to exempt aluminum food and beverage packaging from the tariff. ©GettyImages/Myke EL K
The beverage industry has urged President Trump to exempt aluminum food and beverage packaging from the tariff. ©GettyImages/Myke EL K

Related tags Beer International trade

A proposed 10% tariff on aluminum and 25% tax on steel in the US would increase costs for many industries, particularly beverage makers who would likely have to pass the increase onto consumers.

The tariff on imports is meant to revive the struggling aluminum and steel industries in the US and reduce trade reliance on other countries, according to President Donald Trump, who proposed the tariffs last week.

“When it comes to a time where our country can't make aluminum and steel ... you almost don't have much of a country," ​Trump said last week.

The US can industry has invested over $1bn in US manufacturing facilities over the past five years, employing more than 28,000 people and generating $17.8bn in direct economic activity, according to The Can Manufacturers Institute.

However, the US can industry currently meets 58% of the 2.1m ton domestic demand for can raw materials (aluminum can sheets, aluminum ingot, and tinplate steel) with a domestic production of 1.2m tons in 2016.

“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,”​ CMI said in a statement.

“This would ultimately harm US consumers, who would pay more for canned food and beverage products.” 

Beverage industry reacts

More than half of the beer produced in the US is packaged in aluminum cans or bottles and a 10% tariff would create an additional $347.7m tax for the US beverage industry, according to the Beer Institute.

“Imported aluminum used to make beer cans is not a threat to national security. The largest importer of aluminum to the United States is Canada—one of America’s strongest allies. We urge the Department of Commerce to exclude imported aluminum and cansheet used to make beer cans from these tariffs so as not to unnecessarily increase costs on American businesses and put jobs at risk,”​ Beer Institute president and CEO, Jim McGreevy, said.

MillerCoors, which purchases much of its aluminum from US producers, said it is “disappointed”​ by Trump’s “misguided”​ 10% aluminum tariff announcement.

“Like most brewers, we are selling an increasing amount of our beers in aluminum cans, and this action will cause aluminum prices to rise. It is likely to lead to job losses across the beer industry,”​ the brewer said in a statement on Twitter.

“We buy as much domestic can sheet aluminum as is available, however, there simply isn’t enough supply to satisfy the demands of American beverage makers like us. American workers and American consumers will suffer as a result of this misguided tariff.”

Global metal packaging manufacturer Ball Corporation has also urged Trump to exclude aluminum can sheet or tinplate steel for beverage and food containers from the proposed tariffs.

“Aluminum can sheet and tinplate steel have no national security applications, and tariffs on them likely will have negative downstream impacts on food and beverage manufacturers, as well as increased prices for consumers,”​ Ball chairman, president, and CEO, John Hayes said in statement to BeverageDaily.

Cans vs. other packaging materials

Other packaging types like glass and plastic could stand to benefit if a 10% tax on aluminum goes into effect, CMI added.

There is the potential that consumers who would be hit by the tariff increase on aluminum might switch to beverages in other packaging types, which the can industry argues fall short in regards to recycling rates and product shelf life.

Consumer recycling and composting rates of aluminum packaging tend to be higher (55.1%) compared to glass (32.5%) and PET (31.2%), according to the EPA (US Environmental Protection Agency).

Aluminum packaging also offers a high level of corrosion protection by providing an impermeable barrier to light, oxygen, and contaminants.

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