While many brewers are starting to see the effect of the Craft Beverage Modernization and Tax Reform Act that is part of the current Federal budget and runs through next year, saving brewers anywhere from a few thousand to several million dollars per year, there now appears to be a new worry on the horizon.
Last week the U.S. Department of Commerce recommended to the White House a series of tariffs on imports of aluminum and steel. If acted upon these could have a significant impact on American businesses, including the beer industry where stainless steel is the dominant metal in brew houses and aluminum, the material used for cans.
The report found, among other things, that:
- Aluminum imports have risen to 90% of total demand for primary aluminum, up from 66% in 2012.
- The United States is the world’s largest importer of steel. Our imports are nearly four times our exports.
- On an average month, China produces nearly as much steel as the U.S. does in a year. For certain types of steel, such as for electrical transformers, only one U.S. producer remains.
- From 2013 to 2016 aluminum industry employment fell by 58%, 6 smelters shut down, and only two of the remaining 5 smelters are operating at capacity, even though demand has grown considerably.
The investigation for this report was carried out under Section 232 of the Trade Expansion Act of 1962, as amended. Recommendations include:
For steel: A global tariff of at least 24% on all steel imports from all countries, or; A tariff of at least 53% on all steel imports from 12 countries (Brazil, China, Costa Rica, Egypt, India, Malaysia, Republic of Korea, Russia, South Africa, Thailand, Turkey and Vietnam) with a quota by product on steel imports from all other countries equal to 100% of their 2017 exports to the United States, or; A quota on all steel products from all countries equal to 63% of each country’s 2017 exports to the United States.
For aluminum: A tariff of at least 7.7% on all aluminum exports from all countries, or; A tariff of 23.6% on all products from China, Hong Kong, Russia, Venezuela and Vietnam. All the other countries would be subject to quotas equal to 100% of their 2017 exports to the United States, or; A quota on all imports from all countries equal to a maximum of 86.7% of their 2017 exports to the United States.
“I am glad that we were able to provide this analysis and these recommendations to the President,” said Commerce Secretary Wilbur Ross in a press release. “I look forward to his decision on any potential course of action.”
However, brewing industry advocates pushed back hard against these suggestions. Jim McGreevy, the president and CEO of the Beer Institute even went so far as to “condemn” the report.
“It is disheartening that Secretary Ross did not recommend to President Trump excluding primary aluminum and cansheet from tariffs and other import restrictions in the Department of Commerce’s 232 report,” McGreevy said in a press release. “Additionally, we are concerned that the secretary seems to have minimized the multiple concerns that downstream aluminum users have raised. Instead, he is recommending draconian tariffs and import restrictions that will increase costs and endanger American jobs.”
“Aluminum used to make beer cans is not a national security threat. Aluminum is critical to the well-being of America’s beer industry as more than half of the beer produced annually is packed in aluminum cans or aluminum bottles. If the president accepts any of the recommendations from the Commerce Department’s report on aluminum imports, it will dramatically increase the cost of aluminum in the U.S. and put at risk American jobs in the beer industry, as well other industries that are users of Aluminum,” said McGreevy.
According to the Department of Commerce “The President is required to make a decision on the steel recommendations by April 11, 2018, and on the aluminum recommendations by April 19, 2018.”
“The reports are currently under consideration by the President, and no final decisions have been made with regard to their contents,” the release states. “The President may take a range of actions, or no action, based on the analysis and recommendations provided in the reports. Action could include making modifications to the courses of action proposed, such as adjusting percentages.”