Some beer brands have chosen to raise prices, meaning beer drinkers may also have been taken for a ride.
Grab a beer, and let’s talk economics. Tariffs are intended to support domestic businesses (even if we see plenty of rhetoric that they are used to “punish” exporting countries). The mechanism is pretty straightforward: If you artificially increase the price of imported good, people are more likely to buy the now relatively-less-expensive domestic goods. The problem, however, is that though domestic sellers reap the benefits, domestic buyers are (quite literally) paying the price. For example, with President Trump’s much-publicized aluminum tariffs, domestic aluminum producers should see earnings increase, but that money comes from industries that use a lot of aluminum — like beer companies who use it to make cans.
Certainly, the argument could be made that if the American aluminum industry needs our help (the White House argued that it is a national security issue), then fine: These tariffs are for the greater good. But this week, the industry-wide brewing trade group the Beer Institute made a different allegation: That the implementation of tariffs has simply created a greater scam.
One year has passed since Trump levied his aluminum tariffs so the Beer Institute set out to look at the economic impact by enlisting the help of industry experts Harbor Aluminum. The self-described “aluminum authority” determined that, for the nine-plus months in 2018 after the tariffs were imposed, beverage brands paid about $250 million in “tariffs” for aluminum used to make cans. Except the Beer Institute alleges that only $50 million of that money ended up where it belonged — at the U.S. Treasury. The rest of the “tariff” income, the trade group says, was pocketed by the aluminum industry itself (American smelters and rolling mills).
So how did that happen? The Beer Institute suggests that beverage companies were being charged the full tariff on all the aluminum they bought even though 70 percent of that aluminum is made of domestically-sourced recycled scrap metal. Meanwhile, only 30 percent of aluminum for cans is imported, the trade group states, so beer companies should only be paying a tariff on this percentage.
“Brewers are paying a tariff price even on domestic aluminum,” Jim McGreevy, President and CEO of the Beer Institute, said in a statement. “I have heard from brewers large and small from across the country who are seeing their aluminum costs drastically increase, even when they are using American aluminum.”
If the Beer Institute’s analysis is accurate, it’s not just brewers that are getting ripped off. Some brewers have been forced to pass these increased can costs onto consumers. As a result, whether its questionable practices from the aluminum industry or even the tariffs themselves, many beer drinkers are getting taken along for the ride as well. The Beer Institute’s stance is clear: They believe the best way forward is to repeal the tariffs.