Trump’s Aluminum Tariffs Are Raising Costs To Make Beer For Some San Diego Breweries
Recently, President Trump announced a 10 percent tariff on aluminum imports to "defend our national security."
The White House said aluminum tariffs are a matter of national security because "further closures of domestic production capacity would result in a situation where the United States would be unable to meet demand for national defense and critical infrastructure in a national emergency."
Now those tariffs are trickling down to small businesses who are starting to see their bottom lines shrink. Recently, Mike Hess Brewing’s can supplier let them know prices were going up about a cent-and-a-half each.
"We’ll run close to 3 million cans in the next 12 months," said Mike Hess who owns the North Park brewery. "That’s 125,000 cases and about $44,000 of extra cost."
Unlike gas prices that can change daily, this increase is not being passed along to customers.
"When people walk into a Trader Joe's or a Whole Foods or a Vons ... They see our package as $10 a six pack," Hess said. "(Six packs) only move in dollar increments typically. So it’s very hard for breweries to adjust the price."
"It just squeezes our margins which in the craft industry is already very thin and that makes it tough," Hess said.
Mike Hess Brewing expects to grow by nearly 20 percent this year. Hess said the recent aluminum increase is simply the cost of doing business.
"It’s potentially a short-term issue," he said. "And if the policy drives the metrics and the economics in the right direction then it’s all going to work out. In the meantime then we just eat it — 8 percent out of our net."
Hess said he does not expect to raise prices because of aluminum costs. Recently the brewing company’s can supplier let them know that aluminum prices could start going back down thanks to lobbying efforts.