'Trump Tariffs Threaten US Breweries: "It Seemed Impossible"'

For U.S. craft brewer Bill Butcher, President Donald Trump's growing list of tariffs has unexpectedly led to a scarcity of bottles needed for packaging his beer—introducing uncertainties about rising operational expenses for his business.

Ranging from Canadian malted barley to aluminum beer cans, Trump’s tariffs have affected various items crucial for American craft breweries, impacting enterprises within the largest economic market globally.

Brewers caution that disruptions in supply chains might eventually lead to increased beer prices for customers, despite importers and breweries attempting to cover extra expenses caused by the tariffs and the resulting supply chain issues.

Various sectors throughout the nation are experiencing similar circumstances, such as the construction and home appliances manufacturing industries.

In Trump's most recent move, 25 percent tariffs on U.S. steel and aluminum imports came into play this week.

"As aluminum tariffs have taken effect, leading breweries across the nation are shifting much of their production back to bottles," stated Butcher, who founded Port City Brewing Company in Virginia.

Consequently, his supplier will not be able to provide bottles to him beyond the shipments received in March. Additionally, increased aluminum tariffs elevate the production costs for cans, potentially leading to higher prices in the future.

"There's significant uncertainty. A great deal of disorder has been introduced into our supply chain," Butcher stated to kor.news.

He usually uses around 90,000 bottles each month -- accounting for about 70 percent of his bottled goods -- with the remainder being canned products.

However, in the lack of bottled supplies, he plans to resort to using more aluminum cans instead, or perhaps increase the sale of beer in kegs.

Justin Cox, the founder of Atlas Brew Works, who uses aluminum cans for packaging his beers, approximates that the pricing constitutes roughly one-third of the overall expense for a case containing 24 beers.

Cox mentioned that aluminum tariffs increase packaging expenses for "a product with already slim margins heading towards the wholesale market."

"This ultimately leads to an increased cost for our beer on store shelves," noted Cox, whose operations include locations in Washington and Virginia.

"Approximately 10 percent of each can used in the U.S. consists of Canadian aluminum on average," stated Bart Watson, who is the president of the Brewers Association, a trade organization.

This piles further cost pressures on American craft brewers, he said.

- 'Impossible' -

For Butcher, uncertainty also lingers over costs of the Canadian pilsner malt that forms the base of his beers -- and the bottle caps he imports from Mexico.

Although both items faced President Trump’s broad tariffs on goods from Canada and Mexico earlier this month, his subsequent partial reversal of these duties provided momentary respite.

But it remains unclear if duties will return from April 2, when Trump has promised a new wave of "reciprocal tariffs" to tackle trade deemed as unfair. These will be tailored to each country, taking into consideration their tariff levels on US goods and other factors.

According to Watson, the United States imported approximately $230 million worth of malt last year, with a significant portion going to craft breweries.

He mentioned that most of the barley in the U.S. is typically secured by major breweries or destined for exports to Mexico.

As a result, craft brewers wind up utilizing malt that includes a certain percentage of imported materials, he mentioned.

US importers of foreign products pay tariffs, and breweries anticipate these costs will eventually be passed on to them gradually.

Butcher informed kor.newsit that it has turned into "unfeasible for us to strategize our business and production without knowing the cost of our supplies."

Watch from your seat

Brendan Chaney, who serves as the logistics manager for Port City, pointed out that tariffs have the potential to function as an economic instrument when applied strategically.

However, he warned that across-the-board taxes foster an environment of dread similar to what occurred five years ago during the onset of COVID-19, which disrupted supply chains significantly.

Butcher and Cox cautioned that small enterprises similar to their own possess restricted storage capabilities along with reduced cash flow, which makes it more difficult for them to accumulate extra inventory as a buffer against tariff impacts.

Cox from Atlas Brew Works stated, "We have limited capacity, and for aluminum cans, you must purchase an entire truckload as the smallest amount allowed."

Cox pointed out that the cost of cans can fluctuate as well. Brewers get charged for the end product post-production, often long after their initial order placement.

He mentioned, 'We have no choice but to wait and see if conditions improve before we place our next order,'.

bys/dw