The Southern Brewing Company is based in Athens, Georgia. (CGTN Photo)
In a trade war, there will be some sectors that have much to gain, while others will lose out.
A recent report claims the U.S. collected more than 1.4 billion U.S. dollars in revenue from steel and aluminum tariffs during the first four months of the tariffs being implemented. The duties, 25 percent on steel and 10 percent on aluminum, were originally unveiled as a national security provision.
But the tariffs are hurting some sectors in the U.S., not least manufacturers that use aluminum in their products. Beer manufacturers as well as soft drink companies are among those that are exposed to the new tariffs.
Some craft breweries are already noticing the impact. The Southern Brewing Company is based in Athens, Georgia. They purchased a new canning production line last year. The company cannot keep up with local demand.
Co-founder Rick Goddard said the aluminum import tariffs that were imposed by the Trump administration in March have made each can of beer more expensive to produce. “Costs are definitely going up. We've seen that and our suppliers have run out of cans. We were out of cans for a good four weeks until they were replenished. But not only is the cost going up on the can itself but also the can lids which we buy in great quantity as well. So it is just digging us into a hole rather than digging us out of one,” Goddard said.
Situated some 70 miles away in Atlanta is the headquarters of soft drink giant Coca-Cola. With global production facilities, the company said it is well-positioned to handle the aluminum tariffs. However, in July, CEO James Quincey announced Coca-Cola would raise U.S. prices because of the issue.
“Aluminum is sort of in a mix of a number of different factors right now that are causing costs to rise in the U.S. and soft drink companies like Coca-Cola and PepsiCo have to respond with pricing increases," said Duane Stanford, the executive editor of Beverage Digest Magazine. "I think it fully hasn't come to roost yet in terms of causing major impacts to the soft drink companies but if tariffs continue, then it could cause more pressure.”
The U.S. soft drink industry is big business, and last year, sales reached nearly 195 billion U.S. dollars. While the U.S. beer industry is estimated to be worth over 111 billion U.S. dollars in 2017, craft beer sales make up 26 billion U.S. dollars of that total.
The tariffs have also brought uncertainty and that has led some companies to hold off from further expansion plans. The Southern Brewing Company had looked to expand. But that is currently on hold. “We were discussing getting a bigger canning line,” said Goddard. "Do we expand, do we hire more people to work a new canning line? I know that there are over 6,000 breweries in this country. A lot of them use cans, and who is benefiting from these tariffs? Because I know that the brewing industry, which is one of the hottest industries in this country right now, is not benefiting.”
The saying "small beer" is used to illustrate that something is of little importance. For U.S. beer and soft drink companies, the aluminum tariffs are anything but small.
