Commerce Secretary Wilbur Ross isn’t worried about the impact of proposed tariffs on aluminum and steel on the price of beer. But North Carolina brewers are.
“It’s just a couple pennies, but those pennies add up pretty quickly,” said Erik Lars Myers, founder, CEO and head brewer at Mystery Brewing in Hillsborough. “I feel like that’s something a commerce secretary should know.”
“We’re going to end up having to pass that on to the consumer,” Myers said.
President Donald Trump and Ross last week proposed a 25 percent tariff on imported steel and a 10 percent tariff on aluminum, contending that protection of the domestic industries in those metals is in the country’s national security interests.
“I’m protecting our workers, I’m protecting our companies,” Trump said Tuesday. “We cannot lose our steel industry, cannot lose our aluminum industry.”
Brewers use aluminum for cans and steel for nearly everything else in the beer-making process – including tanks for fermenting and kegs for storing.
“It is one more thing that keeps me up at night,” said Sean Lily Wilson, founder of Fullsteam Brewery in Durham, a mid-sized brewery that Wilson says would be affected more than either larger-scale or small niche breweries.
“We’re neither the local that relies only on in-house tavern sales and a neighborhood setting. Nor are we manufacturers of such scale that we can absorb these costs through efficiencies.”
Ross, who’s worth about $700 million, has defended the tariffs, arguing that the impact on consumers will be tiny and negligible.
“We’re talking about a fraction of a penny on a can of beer,” Ross told NBC’s Chuck Todd on “Meet the Press.” “... The beer industry, you’ll notice, hasn’t put forward any numbers. My number is there’s roughly 3 cents of aluminum in a can of beer. If you put a 10-percent tariff on that, that’s 3/10ths of a cent. Beer sells for over $1 a can.”
On CNBC, Ross made a similar comparison about the cost of a can of soup.
MillerCoors, the second largest U.S. brewing company, said “American workers and American consumers will suffer as a result of this misguided tariff” and warned of “job losses across the beer industry.”
Mystery cans close to 500,000 beers per year, Myers said. He said lids for each can cost 2.4 cents, a number he knows by heart because he shops for the best deal he can find knowing the difference between 2.4 cents and 3 cents “makes a huge difference to me over the course of 100,000 cans.”
Fullsteam and Mystery are among the more than 250 breweries and brewpubs in North Carolina, according to the North Carolina Craft Brewers Guild. Brewers celebrated weeks ago when Republicans passed the Tax Cuts and Jobs Act, which included a cut in the federal excise tax for small and large breweries.
But the savings from that bill could be undone by increased costs from the tariffs.
“This will absolutely wipe it out and probably more than that,” Myers said.
That’s an argument many Republicans in Congress are making, too, as they try to convince the Trump administration to halt the tariff plan.
“Raising taxes in the form of tariffs will only weaken our now-healthy economy,” said Rep. Mark Walker of Greensboro, chairman of the Republican Study Committee in a statement released by the committee. “... While we support the administration’s aim to get the best deal for the American people, leaving free trade agreements or sparking a trade war could leave our allies exposed, our domestic manufacturers scrambling and our economy in turmoil.”
Rep. Patrick McHenry, a Republican from Denver, is one of eight North Carolina members in the House Small Brewers Caucus. The brewers guild delivered letters to McHenry against the tariffs.
Trump, unlike on other issues, has not backed down on the tariffs. He has been a consistent skeptic of free trade since the 1980s, arguing then and during his presidential campaign that other countries are taking advantage of the United States in trade agreements. The U.S. is currently renegotiating NAFTA with Canada and Mexico, which was one of Trump’s core campaign promises.
“To protect our Country we must protect American Steel! #AMERICA FIRST,” Trump tweeted.
But Wilson, who considers himself the “chief executive optimist,” said increased costs could halt planned expansion for his brewery.
“This has implications for small business that are way more intangible and deleterious than the ostensible benefits that it has toward the business it’s intended for,” he said.