Apr 15 2022
The US' domestic beverage industry has paid more than $1.4 billion in aluminum tariffs since they were implemented in 2018, which has subsequently inflated prices for producers and consumers, the Beer Institute said April 14.
"The fastest way to alleviate these high prices on American businesses and families is to repeal the tariffs," Beer Institute CEO Jim McGreevy said in a statement, adding that the need to remove the duties has now become more critical as Americans face the strain of higher costs for gas and groceries.
The Beer Institute said aluminum smelters and rolling mills, including domestic producers, continue to factor tariffs into higher pricing for sales to downstream users regardless of whether their metal is subject to the duty, according to research commissioned by the trade group.
"That means US beer and beverage companies, along with many other users of aluminum, are being charged a higher price for the metal, driving up the cost of doing business in the US and making consumer goods more expensive," the institute said.
The Beer Institute said the domestic beverage industry paid $1.4 billion in tariffs from March 2018-February 2022 for 7.1 million mt of aluminum. The institute's research showed that only about 8% of those proceeds went to the US Treasury, while North American aluminum producers received the remaining balance "by charging end-users such as US brewers a tariff-burdened price," it added.
The Platts spot 99.7% P1020 US Aluminum Transaction Premium was assessed at 40 cents/lb plus LME cash, delivered Midwest, net 30-day payment terms, April 14, according to data from S&P Global Commodity Insights. The premium averaged 26.38 cents/lb in 2021, almost triple the average of 9.01 cents/lb in 2017 before the tariffs were implemented, according to S&P Global data.
Beverage producers are exposed to aluminum pricing as they rely on the metal for can packaging.
"Imported primary aluminum and can sheet are critical to the US beer industry as more than 74% of all beer produced in the United States is packaged in aluminum cans and bottles," the Beer Institute said. "In 2020, brewers bought more than 41 billion aluminum cans and bottles, making aluminum the single largest input cost in American beer manufacturing."
Former US President Donald Trump enacted the 10% tariff on aluminum imports from most countries, along with a 25% steel tariff, in 2018 under Section 232 of the Trade Expansion Act. Since then, some countries have been exempted from the tariff or granted an annual quota allowance for a certain volume of duty-free imports.