Trump's tariffs could significantly impact local breweries
March 08, 2018 10:27 PM
ALBUQUERQUE, N.M. -- After President Donald Trump imposed a 25 percent tariff on imported steel and 10 percent tariff on aluminum on Thursday, some have expressed concerns about how they could affect American consumers.
The policy is set to take effect in 15 days, but the president promises flexibility for Mexico, Canada and other nations to negotiate.
"It's going to be a very fair process," he said. "It's going to be very fair to other countries, especially those that treat us well."
The potential impact reaches all kinds of business, including New Mexico's booming beer industry. Brewers need the cans to package the product and the steel to produce it.
"These are all stainless steel kegs," said Nate Tarantino, the chief financial officer for Albuquerque-based Marble Brewery. "So pretty much anything you'll find in a brewery/brewhouse equipment. All of our process piping, the way we transfer beer from one tank to another is all steel-based."
Marble Brewery first heard of proposed tariffs on steel and aluminum in 2017. The changes are imminent. Pending some negotiation about countries like Canada and Mexico possibly being excluded from the tariff, the changes could significantly affect the beer industry.
"We buy can sheet aluminum from Canadian exporters," Tarantino said. "Then we will actually manufacture the aluminum cans the lids here in the United States, and so it's 98 percent produced in the United States. But the material has to be imported because you can't find primary aluminum in the United States."
Some estimates say a 10 percent tariff on aluminum would likely only amount to about one cent per can. It may not sound like a lot, but it's going to add up when companies order millions of cans every year.
As for the proposed 25 percent tariff on steel, Tarantino said that's what would likely deliver the biggest blow financially.
"All of our tanks, our stainless steel kegs, all of that steel is sourced outside of the United States," he said. "And so a 25 percent cost impact could be much bigger on a dollar impact than a 10 percent tariff on aluminum."
When it comes to Marble Brewery, management says don't expect the tariffs to hurt consumers' wallet.
"We likely wouldn't pass that along to the consumer because that's just not the way pricing works when you have a distributor relationship," Tarantino said. "And so that tens of thousands of dollars in impact is going to be straight to our profit, and unfortunately that results in us not investing as much in our business."
Updated: March 08, 2018 10:27 PM
Created: March 08, 2018 09:08 PM
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