The recent announcement of a 25 percent tariff on steel and aluminum imports by the Trump administration has sent ripples across several industries, including beverage makers, breweries, and automotive manufacturers in the United States. These tariffs, slated to go into effect on March 12, are prompting companies to rethink their production strategies.
President Trump has underscored the necessity for domestic steel and aluminum production, asserting, “We must ensure that steel and aluminum are produced in America, not in foreign countries.” Unlike previous trade policies, these tariffs do not include exemptions for key trading partners such as Canada and Mexico.
In response, Canada, the U.S.’s largest supplier of steel and aluminum, has voiced strong opposition. Prime Minister Justin Trudeau described the tariffs as “entirely unjustified,” while Mexico and the European Union have also signaled their intent to retaliate against these measures.
Transitioning to Plastic Bottles
As companies assess the implications of these trade barriers, Coca-Cola is contemplating a shift towards producing more beverages in plastic bottles instead of aluminum cans due to the anticipated tariff impact. CEO James Quincey remarked, “If the cost of aluminum cans rises, we will likely prioritize [plastic] bottle production.”
Although these changes may affect the company’s operations, Quincey reassured analysts that Coca-Cola’s core U.S. business will remain robust despite these adjustments.
Effects on Beer Prices
The Brewers Association, which represents craft breweries in the U.S., has pointed out the critical role that aluminum and steel play in the brewing industry. Given that a significant portion of craft beer is packaged in aluminum cans, any resulting price hikes from tariffs could seriously impact the sector.
Small and independent breweries that export to Canada have already experienced the repercussions of previous tariffs, and the current situation presents additional hurdles. The possibility of retaliatory tariffs on U.S. beer exports adds further complexity for these breweries.
Worries in the Automotive Sector
Leading car manufacturers in America are expressing their concerns regarding the potential disruptions the tariffs may cause. According to Ford CEO Jim Farley, the impact on pricing and supply chains could lead to “chaos” within the industry.
While Ford primarily sources its materials domestically, the global interconnectivity of supply chains means that these tariffs could still have negative consequences. The looming threat of additional tariffs on goods from Canada and Mexico only heightens the uncertainty for automakers.
