For Craft Beverage Makers, New Steel And Aluminum Tariffs Bring Uncertainty

Mar 27, 2018

Tariffs imposed by President Donald Trump on some imported steel and aluminum went into effect late last week. Several countries have received exemptions from those tariffs, but still some industries in the U.S. are wary of them — including craft beer and cider makers.

More from NPR — "Trump Formally Orders Tariffs On Steel, Aluminum Imports" [March 8]

If you drink craft beer or cider, you may have noticed a recent trend: a shift away from glass bottles and toward cans. The idea is that cans are lighter, cheaper to ship and can be easier to recycle.

Speaking in his company’s canning facility in Burlington, Justin Heilenbach — the president and co-founder of Citizen Cider — says if the cost of aluminum cans goes up, that could get passed on to the consumer. The same goes for the price of kegs, which are made out of steel.

VPR’s Henry Epp spoke to Justin Heilenbach. Listen to their conversation above.

Justin Heilenbach, CItizen Cider's president and co-founder, says that if prices for aluminum cans or steel kegs are going up, that may get passed on to consumers.
Credit Henry Epp / VPR

Right now, Citizen Cider owns its kegs, but if the price of imported steel kegs increases, Heilenbach says the company might switch to leasing kegs from a middleman.

“Or we may pass it on in the cost of a keg,” Heilenbach says. “It’s not ideal because the draught market is hyper-competitive, and it’s all about price.” 

Heilenbach says the main impact of the tariffs so far is uncertainty.

“When there’s uncertainty, it’s hard to plan, and hard to think out into the future and plan a business model that’s gonna make sense,” Heilenbach said.

For Andrea Gagner, the CEO of 14th Star Brewing in St. Albans, how or if the tariffs will have an impact isn’t clear yet. The brewery cans most of the beer they produce.

"There was a price increase from our can supplier at the beginning of the year. We're hoping that this won't cause an additional one this year because our budgets have been set and we’re hoping it stays within what we expected for the year." — Andrea Gagner, 14th Star Brewing CEO

“There was a price increase from our can supplier at the beginning of the year,” Gagner said. “We’re hoping that this won’t cause an additional one this year because our budgets have been set and we’re hoping it stays within what we expected for the year.”

Gagner said if aluminum prices go up, it will mean a choice between a smaller profit margin or passing on the cost to consumers.

“With the amount of really great craft beer out there, the profit margins aren’t huge to begin with,” Gagner said.

Inside Citizen Cider's canning facility in Burlington. The company's president and co-founder Justin Heilenbach says "uncertainty" is the main impact of the tariffs as of now.
Credit Henry Epp / VPR

Even if steel and aluminum prices go up, companies did just get a significant tax cut in the federal tax bill passed in December. But Heilenbach doesn’t think that will balance out the potential costs of aluminum and steel tariffs.

“This whole thing is like robbing Peter to pay Paul,” Heilenbach says, “because, you know, we get a tax incentive over here, and then we pay more for materials over there. … It’s gonna net out neutral or probably be, you know, work against us.”

The U.S. has already granted several allies exemption from the tariffs, including Canada, Mexico and the European Union. The U.S Commerce Department has also set up a process for industries to request that certain products be exempted from the tariffs.