News Aluminum tariff likely to raise beer can prices

Discussion in 'Beer News & Releases' started by jmdrpi, Mar 1, 2018.

  1. jmdrpi

    jmdrpi Poo-Bah (5,086) Dec 11, 2008 Pennsylvania

    http://money.cnn.com/2018/03/01/news/economy/trump-steel-aluminum-trade/index.html

    The White House's announcement of a tariff on steel and aluminum is likely to affect the price of beer cans:

    Backlash from the beer industry:

     
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  2. Birdrinker

    Birdrinker Initiate (128) Mar 30, 2014 Colorado

    Can't you just feel trump picking the pennies out of the pockets of his supporters...
     
  3. jmdrpi

    jmdrpi Poo-Bah (5,086) Dec 11, 2008 Pennsylvania

    The Brewers Association (craft beer industry/lobbying group) also issued a statement:
    https://www.brewersassociation.org/current-issues/announcement-pending-aluminum-steel-tariffs/

    They estimate it would add 20 to 24 cents to a case of cans.
     
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  4. woodchipper

    woodchipper Savant (954) Oct 25, 2005 Connecticut
    Premium

    Some day, way in the future, I dream that all wages in the world are at parity and all tariffs are gone. Then things will be made either near the raw materials or near the consumer. This is because I can only foresee shipping costs going up. Of course that "all tariffs gone" thing is a real pipe dream.
     
  5. Jaycase

    Jaycase Meyvn (1,165) Jan 13, 2007 Illinois
    Trader

    Curious if they were to pass this 10% tariff on to the consumer, how much of a price increase per can would this equate to?
     
  6. jmdrpi

    jmdrpi Poo-Bah (5,086) Dec 11, 2008 Pennsylvania

    See the quote from the Brewer's Association. 20 to 24 cents to a case of beer.

    Not sure how the math works to get to 20,000 jobs. Of course these numbers are from the beer lobbyists, so probably best to take with a grain of salt.

    Just when everyone switched to cans! Back to bottles now?
     
  7. Jaycase

    Jaycase Meyvn (1,165) Jan 13, 2007 Illinois
    Trader

    Thanks. So about a penny per can which to me seems fairly negligible particularly when it comes to craft beer consumer purchasing.
     
  8. drtth

    drtth Poo-Bah (3,542) Nov 25, 2007 Pennsylvania

    Don't forget the impact on such things as brewing equipment that has to be replaced, kegs, etc., etc.
     
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  9. Giantspace

    Giantspace Defender (642) Dec 22, 2011 Pennsylvania

    A penny a can.

    Even I can deal with that. A little over reaction maybe?

    Get ready for stupid increases blaming it on can prices.

    " cans are up 1 penny each, we can now add $5 a case at the wholesale level."

    Enjoy
     
  10. Greyvtrayn

    Greyvtrayn Initiate (152) Feb 17, 2017 New Jersey

    How much of the aluminum used for cans or steel for tank/equipment production is imported? Up to 20k jobs could be lost because of the tariffs?! There is virtually no way to quantify that. Excuse me while I grab this grain of salt.
     
  11. drtth

    drtth Poo-Bah (3,542) Nov 25, 2007 Pennsylvania

    It actually can be quantified. But the accuracy of the estimate is a bit hard to be sure of without access to the report and data on which the estimate is based.
     
  12. ivegot3Dvision

    ivegot3Dvision Zealot (521) Feb 9, 2015 Oregon
    Trader

    Currently aluminum is about $1.00 per lb, so it would go up $0.01 per lb. It's about 32 cans per lb of aluminum so the raw materials per can is going up $0.00003125. Man, that tariff is going to hit the consumer real hard.
     
  13. Greyvtrayn

    Greyvtrayn Initiate (152) Feb 17, 2017 New Jersey

    I should say that I did drop out of Economics.
     
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  14. Giantspace

    Giantspace Defender (642) Dec 22, 2011 Pennsylvania

    That would be us .10 not.01. Yes? 10% tariff.

    Enjoy
     
  15. MNAle

    MNAle Savant (962) Sep 6, 2011 Minnesota

    None of this "data" is actually data. It is all headline-grabbing click bait multiplied by political agendas.

    We love to buy local when it comes to beer. Cans??? Not so much; there it is all about the money raised to the power of politics.
     
  16. jmdrpi

    jmdrpi Poo-Bah (5,086) Dec 11, 2008 Pennsylvania

    The CNN article says 90% of aluminum used in the US is imported.

    China is by far the #1 producer worldwide but some US companies actually moved to Iceland, because of the cheap electricity from geothermal and hydro power
    https://mobile.nytimes.com/2017/07/...companies-still-make-aluminum-in-iceland.html
     
    #16 jmdrpi, Mar 2, 2018
    Last edited: Mar 2, 2018
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  17. Squire

    Squire Poo-Bah (1,949) Jul 16, 2015 Mississippi
    Premium Trader

    Of course economic equilibrium is perfectible but first we'll have to perfect human beings.
     
  18. Riff

    Riff Crusader (709) May 12, 2016 Virginia

    Yes and no. Sounds like you're only considering the commodity price on the open market. Doesn't take into account any markups due to distributors, shipping, storage costs, manufacturing of the cans, etc. That's where your costs really go up. For a company like MillerCoors, that sort of markup does have the potential to tick off their fans.
    On the other hand, if you're canning beer you're most likely buying in bulk. Leads to the question for craft breweries if they have the margins available to allow them to absorb the higher cost of cans. After all, they will generally have to out of pocket the additional expense before they see an increase in income from raised prices.
     
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  19. ivegot3Dvision

    ivegot3Dvision Zealot (521) Feb 9, 2015 Oregon
    Trader

    I was just going off the raw materials price, not the markup. That's a bit harder to calculate.
     
  20. ivegot3Dvision

    ivegot3Dvision Zealot (521) Feb 9, 2015 Oregon
    Trader

    Yessir. Man, I'm an engineer and I missed that, long days at work do that to you. Go ahead and move the decimal point over one place to 0.0003125 per can.
     
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  21. MNAle

    MNAle Savant (962) Sep 6, 2011 Minnesota

    IF I understand correctly, the tariff applies to the commodity, not the finished product.
     
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  22. thebeers

    thebeers Poo-Bah (2,128) Sep 10, 2014 Pennsylvania
    Premium Trader

    20,00 jobs lost at bars and breweries due to, what the industry lobbyists claim, is at most a penny per can increase?

    #1 -- I bet they inflated that guesstimate and it's far less than a penny a can.

    #2 -- Even if it is that much, bullshit does that cost 20,000 jobs in bars and breweries.

    #3 -- Those union-wage, U.S. jobs being saved are a big part of what the U.S. middle class was built upon. Not many people care about that any more, but they should. I don't have a problem with imports, but if they're subsidized by foreign government subsidies OR sweatshop labor, that's not a level playing field.

    #4 -- I paid $20 a four-pack for cans of of Tired Hands yesterday. Even if you're only paying a quarter that price, a penny a can is nothing. This isn't about consumers or even craft brewers paying more, it's about HUGE companies not wanting to pay fair wages.
     
  23. johnInLA

    johnInLA Crusader (764) Jun 12, 2005 California
    Premium

    Anyone that thinks increasing tariffs, which equates to increasing commodity prices, will increase jobs,, does not understand economics. For every union aluminum job saved there will be more jobs lost in other industries. The commodity will still be cheaper outside the US. Combine that cheaper labor abroad and you are inviting companies to leave. The big hit will be to manufacturers that use large amounts of aluminum.

    Sure the impact on brewers may be small. As a consumer, 1 cent a can isn't going to matter. Unless if of coarse you are a brewer, having to absorb the cost. How many times have you seen beer prices increase by 1 cent per can, So it will either hurt brewer's bottom line, which effects their employees ( as in jobs ) or the price increases will be larger.

    And we haven't even gotten into the effect of tariffs imposed by other countries in retaliation.
     
  24. MJS08

    MJS08 Aspirant (277) Jul 29, 2014 Florida
    Premium

    Windmills are next.
     
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  25. SammyJaxxxx

    SammyJaxxxx Poo-Bah (2,184) Feb 23, 2012 New Jersey
    Premium Trader

  26. rgordon

    rgordon Champion (837) Apr 26, 2012 North Carolina

    Sancho and I are heading to the coast tomorrow, looking for more bauxite. Time is right!
     
  27. LavaLite

    LavaLite Initiate (37) Dec 3, 2016 Illinois

    That evil son of a bitch !! Wipes out 20,000 jobs in America in the blink of an eye.
     
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  28. honkey

    honkey Zealot (535) Aug 28, 2010 Arizona
    Premium

    It might seem like an insignificant amount when you don’t work in the industry and face a ridiculous amount of challenges as is... Try telling that to all the breweries that already struggle to make any profit at all due to ridiculous government laws.
     
  29. bbtkd

    bbtkd Poo-Bah (2,001) Sep 20, 2015 South Dakota
    Premium

    Fake news. OK yeah, tariffs are raising the cost, but it's noise level compared to inflation, etc. But anti-administration folks are doing some bad math and coming up with a wild-ass number of people that will lose their jobs. They can say whatever they want because there is no real good way to measure the impact and call them on it. No jobs or sales will be lost in the beer industry. Perhaps a few jobs will be impacted at Ford or other manufacturers who buy massive amounts.
     
  30. Beersnob724

    Beersnob724 Initiate (110) Jan 11, 2016 Ohio

    So price drops 25% the beer price stays the same. It goes back up 10% and all the sudden price increases are expected. Smh.
     
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  31. IPAExpert69

    IPAExpert69 Initiate (149) Aug 2, 2017 New Jersey

    "Nobody can measure this so all numbers are fake" please give me a break. There are literally people who's entire careers are hyper focused on collecting metadata. And saying that not many people are going to lose their jobs so it's alright to radically increase prices across such a necessary metal is a ludicrously dumb position. People rejecting data with no understanding, experience, qualifications and merit (just yelling fake) is the worst trend in modern economics/politics.
     
  32. thebeers

    thebeers Poo-Bah (2,128) Sep 10, 2014 Pennsylvania
    Premium Trader

    Assuming that the worst-case-scenario of a penny a can is correct, do you have a back-of-the-envelope estimate of how much that will cost you each year?

    I'm genuinely curious. For small brewers that do a lot of canning, I'm guessing it's in the thousands to tens of thousands range. For regional brewers, could be quite a bit more.

    (FWIW, I'm skeptical of the penny-a-can claim. 98 percent of canstock used by American brewers is already made in the USA, and thus wouldn't be subject to tariffs. Yes, there may be increased competition for US aluminum before production expands, and yes, some feedstocks may have tariffs applied, either of which could raise the price of American made canstock -- but we don't know yet, as what specifically they're applying tariffs to, and from which countries, won't be published until next week at the earliest.)
     
  33. rgordon

    rgordon Champion (837) Apr 26, 2012 North Carolina

    Trade wars are good. They're easy to win. Sure they are.
     
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  34. Ranbot

    Ranbot Zealot (531) Nov 27, 2006 Pennsylvania

    I'm not against some protections of US industries deemed vital to the health and security of the nation and the US does get a lot of aluminum and steel from countries with questionable or unfair labor practices, subsidies, lax regulations, corruption, etc., so I can understand and agree there. However, the US also imports a lot of these materials from countries with comparable labor conditions and business practices to that in the US competing on a relatively level field. For example Iceland was mentioned by @jmdrpi in regards to aluminum.
    The largest supplier of steel to the US is Canada, and Trump's favorite boogeyman, China, is actually 5th down the supplier list. This graph is from CNN money:
    [​IMG]

    If we take the POTUS at his word,* this will be a blanket tariff that does not differentiate between "bad" and "good" trading partners. Furthermore some of the countries impacted by the tariffs are also great long-standing world allies, which should count for something if national security is being cited as a reason for tariffs. Tariffs and subsidies need to be aimed with precision, not a carpet bombing.

    * - which has a history of changing suddenly. Maybe teasing this announcement will give the White House some time to gauge reactions and refine the plan (I hope).
     
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  35. MNAle

    MNAle Savant (962) Sep 6, 2011 Minnesota

    Like all things related to the global economy, it is very complex. The details of the tariffs are not even known yet. Anyone proclaiming "facts" regarding jobs lost / gained or the overall impact on the economy is merely demagoguing for political gain. This includes some people who posted in this thread.
     
  36. honkey

    honkey Zealot (535) Aug 28, 2010 Arizona
    Premium

    $2,500 per thousand barrels canned for 16 oz. cans. $3,300 per thousand barrels canned for 12 oz.
     
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  37. Sweatshirt

    Sweatshirt Disciple (309) Jan 27, 2014 New Hampshire
    Trader

    How about the $3.50 per bbl tax reduction in 2018? That will more than offset anything that comes from this.

    Prices will still go up I'm sure.
     
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  38. jesskidden

    jesskidden Meyvn (1,314) Aug 10, 2005 New Jersey

    Or (in the case of steel) basing it on an examination of a previous tariff:
     
  39. MNAle

    MNAle Savant (962) Sep 6, 2011 Minnesota

    A lot has changed in 15 years, and the sponsors of that study certainly had no political axe to grind!