Steel and Aluminum Tariffs Could Impact U.S. Alcohol Beverage Producers

As has been widely reported, the President of the United States has proposed enacting steep tariffs on U.S. imports of steel and aluminum.  These tariffs could both directly impact U.S. alcohol beverage products that use those materials such as beer, and result in retaliatory tariffs targeting U.S. goods nominally unrelated to steel and aluminum, including U.S. wine and spirits.

The direct impacts on the costs of steel and aluminum containers, particularly in canned beer and the growing canned wine segment, could obviously impact the competitiveness of U.S. beer and wine. Major beer manufactures have expressed strong objection to the tariffs and projected job losses throughout the industry.  As the Wall St. Journal reported, some industry experts have speculated that this cost increase may push consumers away from beer and towards other alcohol beverages typically packaged in glass.

But Washington Post reporting suggests U.S. wine manufacturers, especially those that export their products, should temper any expectations of a gain from such a shift.  Retaliatory tariffs are a distinct possibility, including from some of the U.S.’s historically strongest trade partners.  The E.U. has already threatened retaliatory tariffs against Kentucky bourbon.  Canada, the largest exporter of steel and aluminum to the U.S. and the second largest export market for U.S. wine behind the European Union, may follow suit.  One Canadian trade lawyer, Lawrence Herman, has suggested a tariff on U.S. wine exported to Canada as a first response: “‘Canadian consumers are not going to be prejudiced’ because there are many alternative sources of wine in the world.”

A number of affected alcohol beverage industry groups have already spoken out on their plans to contact the Commerce Department to voice their concerns. It remains to be seen whether the tariffs will actually be implemented, and if so, whether they will apply to all countries, or exclude favored trading partners.