Global Law Experts Logo
GLE-PP

Find a Global Law Expert

Specialism
Country
Practice Area
awardsr

Awards

Since 2010, the Global Law Experts annual awards have been celebrating excellence, innovation and performance across the legal communities from around the world.

Aluminum Tariffs & Trade Wars: Impact on the Beer Industry, and Perhaps Much More

posted 7 years ago

    By: Richard M. Blau, Chair, Nationwide Alcohol Beverage Law 

    The current administration in Washington D.C. has promised to impose new tariffs on imported steel and aluminum. Current reports suggest a twenty-five percent (25%) tariff will be imposed on imported steel, with a ten percent (10%) tariff added to the cost of imported aluminum. Enterprising pundits are atwitter over the prospect of a devastating impact that an aluminum tariff could have on one of America’s favorite beverages – beer!

    Is there cause for concern? Yes, but perhaps not for the reasons cited by the beer industry.

    The Beer Facts – Given that more than half the beer produced in America today is packaged in aluminum, it is not surprising that the nation’s beer industry has responded negatively to the proposed tariffs. According to The Beer Institute, the 10% aluminum tariff would amount to a $347,700,000 tax on beverages sold in cans. Moreover, in a statement released on March 1, 2018, that same beer industry trade association predicted that the aluminum tariff would result in the loss of more than 20,000 American jobs. Against these concerns, many Americans are wondering whether the country’s favorite pastime beverage will become unaffordable.

    Misgivings about an aluminum tariff are justified but should be understood in proper context. At the end of 2016 (the last full year for which the federal government has published industry statistics), more than 5300 breweries operated across America. Our nation’s beer industry produced over 190 million barrels, sold over a $100 billion worth of beer, and employed either directly or through related service providers over 69,000 employees. Perhaps most relevant to the issue of an aluminum tariff, approximately sixty percent of all the beer sold by American brewers is packaged in aluminum. In this context, a ten percent tariff on imported aluminum certainly is going to have an impact on America’s beer industry. But how much of an impact?

    Currently, the United States imports fifty-two percent (52%) of all the aluminum used in this country for manufacturing. That said, focusing specifically on the beer industry, production data indicate that it costs the larger brewers, e.g., Anheuser-Busch InBev, Miller-Coors, Heineken USA, approximately ten cents ($.10) to produce an aluminum can for beer. The ten percent tariff on aluminum, if imposed, would add an additional one cent ($.01) to production costs involving imported aluminum.

    However, an often under-reported fact is that Americans are very good at recycling, and aluminum is one of the most successfully recycled products in the United States. According to current industry data, beer cans produced in America today typically contain approximately seventy percent (70%) recycled aluminum. Consequently, the true impact to the end-user consumer of a ten percent tariff on imported aluminum – at least in the context of beer production in this country – may be smaller than one cent per can. Recycled materials may reduce the added cost of production to the point that the marginal increase amounts to one-third of a penny per can or two cents ($.02) per six-pack. Given the current average cost of beer in America today, this represents a relatively small “added tax” to the consumer. In contrast, the burden on drinkers of soda is proportionally much higher, given the relatively lower unit cost of non-alcohol beverage products.

    Is the beer industry overreacting? What harm can a few pennies per six-pack cause?

    A consumer-focused analysis does not tell the whole story. For example, looking at the production side, beer industry analysts predict that the tariff will amount to a $347,700,000 tax on beverages sold in cans, and will result in the loss of tens of thousands of jobs. How can those effects result from a tariff that raises the consumer’s cost by mere pennies?

    Consider this: Anheuser-Busch InBev is recognized as the largest beer producer in the world. That company estimates that a quarter of its cost base in the United States is related to the purchase of new aluminum. A ten percent increase in new aluminum costs, directed at an expense category that accounts for twenty-five percent of overall production costs, becomes a much more significant hit to the economics of the situation. Those are the numbers that lead to concerns about raising prices and cutting jobs.

    Where the Greater Impact May Lie: Of even greater concern to Americans overall are the impacts that the proposed steel and aluminum tariffs will have beyond the beer industry. Tariffs and trade wars between nations have a long, and often sad, history. Experience shows that the unilateral imposition of tariffs such as those proposed by the current administration is likely to lead to tariff retaliation from those nations that are affected.

    News media are reporting (accurately) that the immediate and greatest impact of the proposed tariffs will not fall on market wrongdoers who abuse free trade policies to engage in unfair competition. Rather, in the current case, the steel and aluminum tariffs are likely to impact America’s closest allies, i.e., Canada and key members of the European Union.

    History shows that the typical reaction to unilaterally-imposed tariffs will be retaliation from the affected countries. Unfortunately, history also shows that retaliatory tariffs rarely apply to the same categories of goods. So, instead of imposing counter-tariffs on U.S.-produced steel and aluminum, retaliating countries are more likely to impose their import taxes on unrelated products, such as wine, American automobiles, and especially agricultural commodities. These are the products that are among the most impactful to the United States economy.

    Tariffs, and the concomitant tariff retaliation could have disastrous consequences for the U.S. economy. America’s tariffs are likely to increase prices. While the analysis above suggests that the increases to consumers for canned beer will be relatively low, the same cannot be said for products that contain significant amounts of imported steel, such as automobiles, kitchen appliances, heavy equipment, and a host of other product categories. Resulting price increases are likely to spur inflation at a time when economists already are concerned about inflationary risks resulting from the huge corporate tax cut and the growth in federal spending that will go into effect this year.

    Moreover, retaliatory tariffs from nations such as Canada, China and the EU are likely to depress economic activity in the affected product sectors. For example, if agricultural products are targeted for retaliatory tariffs, they will become more expensive for overseas markets, and therefore more difficult for American farmers to export. Reductions in export sales will translate into lost profits, and potentially even lost jobs as well. Thus, America will face the situation where many of its imported goods are more expensive, while the ability to profitably export Made in America goods decreases. The resulting whipsaw effect potentially may eliminate any progress made towards real wage growth for the majority of Americans.

    Where the GREATEST Impact May Lie: Will the beer industry, as a slice of the American economy, survive the imposition of tariffs on steel and aluminum? Without a doubt, although adjustment to the tariffs may be a painful process resulting in higher costs of production and the loss of jobs in a time that otherwise would have been an economic renaissance for the beer industry.

    What about the rest of the economy, and America as a whole? That is a far more problematic question to answer. The risk of inflationary pressures increasing costs of production and resulting price increases may cause the federal reserve to raise interest rates on a faster schedule than originally intended. Rising interest rates will make the value of the American dollar greater but not stronger. In other words, the dollar will represent a greater value because the federal government is willing to pay more interest to attract lenders; it will not be stronger because of any improved means of production, expansion of resources, or development of additional value.

    However, perhaps the greatest downside to all of this lies beyond the economics. Igniting trade wars represents one more example of America’s new attitude – an “America First” approach that many of our traditional allies across the border and around the globe are translating to mean that America prefers to “go it alone.” Such a concept may have been viable in previous centuries. Not today. Changes in technology, a globalized economy, and shifting international relations render such attitudes not only unrealistic but dangerous to America and its longer-term interests.

    Conclusion: Tariffs are the economic equivalent of weapons of mass destruction — WMDs. As such, they should be deployed cautiously, carefully and with a deliberate purpose directed to address specific market wrong-doing. Whether the steel and aluminum tariffs recently proposed by the current administration meet those criteria appears to be far from clear.

    Will America’s beer industry suffer from the fallout of their deployment? Probably not in any catastrophic way (although it’s pretty catastrophic if you are one of the 20,000 projected to lose a job as a result of their imposition).

    Will the greater (or greatest) impacts come to pass? THAT is the far more important question.

Find the right Legal Expert for your business

The premier guide to leading legal professionals throughout the world

Specialism
Country
Practice Area
LAWYERS RECOGNIZED
0
EVALUATIONS OF LAWYERS BY THEIR PEERS
0 m+
PRACTICE AREAS
0
COUNTRIES AROUND THE WORLD
0

Join

who are already getting the benefits
0
Sign up for the latest legal briefings and news within Global Law Experts’ community, as well as a whole host of features, editorial and conference updates direct to your email inbox. Naturally you can unsubscribe at any time.

Online Casino Reviews

  • Freeroll Poker Tournaments For Real Money
  • Australian Online Casino Real Money
  • Best Slot App To Win Real Money
  • Online Casino Real Money Australia
  • Best Paying Online Pokies
  • Wizard Of Oz Online Slots
  • All Slots Casino Mobile
  • Best Online Poker App Real Money
  • Best Online Casino To Play Roulette
  • Is Online Casino Legal
  • Online Casino That Accepts Paypal
  • Play Roulette For Real Money
  • Slot Apps To Win Real Money
  • Real Money Slots Online Usa
  • Safe Online Casino
  • Wizard Of Oz Slots
  • Real Online Pokies Nz
  • Biggest Online Casino In The World
  • Online Casino Pay With Paypal
  • Online Casino That Accept Paypal
  • Online Casino Canada Real Money
  • 3 Card Poker Online Real Money
  • Online Slots Real Money Canada
  • Best Online Poker Sites For Real Money
  • Real Money Poker App Android Usa
  • How To Make Money From Online Casino Bonuses
  • Real Money Poker App Iphone
  • How To Play Blackjack Online For Real Money
  • Best Slots To Play
  • Top 10 Online Pokies
  • Best Poker Apps Real Money
  • Online Casino Legal
  • Best Payout Online Casino Uk
  • Win Money Online Slots
  • Online Poker Nj Real Money
  • How To Win Online Slots
  • Casino Gaming License
  • Play Real Pokies Online
  • Blackjack Sites For Real Money
  • Real Money Casino Games For Android
  • Best New Online Slots
  • Flaming 777 Slots Games
  • Online Blackjack With Live Dealers
  • How To Play Online Slots
  • Facebook Casino Games Real Money
  • Online Casino With No Minimum Deposit
  • How To Beat Online Slots
  • Online Casino License
  • The Big Payback Slots
  • Royal Vegas Online Casino Withdrawal
  • Online Casino Minimum Deposit 5
  • Online Pokies Real Money Australia
  • Las Vegas Usa Online Casino
  • Real Money Poker App Android
  • Wheel Of Fortune Slots
  • Game Of Thrones Slots
  • Online Poker Real Money Usa Legal
  • Best Online Casino European Roulette
  • Blackjack Online Real Money Paypal
  • Online Video Poker Real Money Usa
  • How To Create An Online Casino
  • Lucky Nugget Online Casino Mobile
  • How To Withdraw Money From Online Casino
  • Platinum Play Online Casino Download
  • Online Casino For Usa Players
  • Best Online Casino Usa Real Money
  • Online Roulette Real Money Usa
  • Best Real Money Poker Sites
  • Android Slots Real Money
  • How To Start An Online Casino Business
  • How To Start An Online Casino
  • How To Start An Online Gambling Site
  • Best Online Casino For Blackjack
  • Play Baccarat Online For Money
  • Online Pokies New Zealand
  • Best Slots To Play At Golden Nugget
  • Slots Of Vegas Online Casino
  • Best Online Pokies Site
  • How To Beat Online Roulette
  • New Zealand Online Pokies
  • Online Poker Mobile Real Money
  • Which Online Slots Payout The Most
  • Is Online Casino Legal In India
  • Online Casino Software For Sale
  • Best Online Casino For Craps
  • Hard Rock Casino Slots
  • Win Real Money Online Pokies
  • Online Casino With Highest Payout Percentage
  • Poker Apps With Real Money
  • Online Roulette Real Money Review
  • Full Tilt Poker Real Money
  • Online Casino 5 Dollar Minimum Deposit
  • Online Roulette With Real Money
  • Best Online Roulette For Real Money
  • I Migliori Casino Online Italiani
  • Best Payout Online Slots
  • How To Play Baccarat Online
  • Play Casino Card Game Online
  • Play Blackjack Online For Real Money
  • Best Paying Online Slots
  • Casino License Cost
  • Online Poker Real Money California
  • Safe Online Casino Australia
  • Online Roulette Australia Real Money
  • Online Poker Real Money Texas
  • Online Roulette Real Money Paypal
  • Online Slots Australia Real Money
  • Golden Nugget Online Casino Review
  • Casino Games To Win Real Money
  • Online Pokies Australia Real Money
  • Online Gambling Blackjack Real Money
  • Win Real Money Playing Slots
  • How To Win Roulette Online
  • Aristocrat Pokies Online Real Money
  • Hollywood Casino Online Slots
  • Play Online Keno For Real Money
  • What's The Best Online Casino
  • Triple Double Diamond Slots
  • Play Roulette Online With Real Money
  • Roulette Online For Real Money
  • Play Roulette Online Real Money
  • Best Online Pokies Real Money
  • Big Red Pokies Online
  • How To Win At Online Blackjack
  • What Is The Best Online Roulette Site
  • Real Money Online Pokies
  • Spin To Win Slots
  • Ruby Slots Online Casino
  • Wheel Of Fortune Online Casino
  • Spin Palace Flash Casino Online
  • Online Poker Real Money App
  • Online Casino With Paypal Deposit
  • How To Win At Online Roulette
  • Can You Win Real Money On Slot Apps
  • Is Ignition Casino Safe
  • Online Casino Blackjack Real Money
  • Online Casino Win Real Money Usa
  • How To Make Money Online Casino
  • Online Casino Real Money Reviews
  • Slot Games To Win Real Money
  • Jackpot City Online Casino Download
  • Online Pokies Real Money
  • Casino War Online Real Money
  • Online Casino No Minimum Deposit
  • Play Wheel Of Fortune Slots Online
  • Best Online Casino Game To Win Money
  • Online Casino Without Wagering Requirements
  • Online Slots For Real Money Usa
  • Legal Online Casino Australia
  • How Do Online Slots Work
  • Best Online Casino For Us Players
  • Online Play Casino Roulette Game
  • Online Blackjack Real Money Australia
  • Real Casino Games Real Money Online
  • Online Slot Machines Real Money Paypal
  • The Best Online Casino For Roulette
  • What Online Casino Pays Out The Most
  • Start Your Own Online Casino
  • Legal Online Casino
  • Online Live Roulette Casino Game
  • Playing Blackjack Online For Real Money
  • Online Penny Slots Real Money
  • Best Online Blackjack For Money
  • How To Win Online Roulette
  • Real Money Poker Sites Usa
  • Best Time To Play Slots
  • Online Keno For Real Money
  • Best Payout Online Slots Uk
  • Online Slots Real Money Reviews
  • Best Online Pokies Nz
  • What States Allow Online Gambling
  • Best Real Money Poker App
  • Online Slots To Win Real Money
  • Real Money Slots App Iphone
  • Jackpot City Flash Casino Online
  • Ignition Casino Legit
  • All Star Slots Casino
  • How To Play Online Casino
  • Real Time Gaming Slots
  • Online Video Poker Real Money
  • How To Play Roulette Online For Money
  • How To Win On Online Slots
  • Age Of Gods Slots
  • Online Real Casino Money Games
  • Best Online Slots To Play
  • Online Poker California Real Money
  • Is Jackpot City Casino Legit
  • How To Win At Online Slots
  • Play Poker For Real Money
  • Safe Online Pokies Australia
  • Best Way To Play Slots
  • How To Play Casino Online
  • Play Online Roulette For Money
  • Online Casino Australia Real Money
  • Which States Allow Online Gambling
  • Play Keno Online Real Money
  • How To Win Online Blackjack
  • Online Blackjack With Real Dealers
  • How To Open Online Casino
  • What Are The Best Online Slots To Play
  • Big Win Casino Slots
  • Spin Palace Online Casino Australia
  • Best Slots To Win On
  • Casino Slots Win Real Money
  • Slots Magic Online Casino
  • Blackjack Online For Real Money
  • Slot Machine App Win Real Money
  • Online Casino Not Paying Out
  • Slots That Pay Out Real Money
  • Online Pokies Australia Reviews
  • Online Casino Minimum Deposit 1
  • Jackpot City Online Casino Review
  • Live Dealer Baccarat Online Casino
  • Online Casino Apps For Android
  • Online Casino Paypal Deposit Australia
  • Online Casino With Live Dealer
  • How To Play Blackjack Online
  • Slots To Win Real Money
  • Wheel Of Fortune Online Slots
  • Play Quick Hit Slots Online
  • Can You Count Cards In Online Blackjack
  • Palace Of Chance Online Casino
  • How To Play Roulette Online
  • Good Slots To Play
  • Which Online Casino Pays Out The Most
  • Heart Of Vegas Casino Slots
  • Best Online Casino For Canadians
  • Australian Online Pokies Real Money
  • Mohegan Sun Online Casino Nj
  • Online Casino Live Games Best Uk
  • Best Online Casino Australia Reviews
  • Play Pokies Online Real Money
  • Best Online Casino For Usa Players
  • How To Win Online Casino
  • Play Blackjack For Real Money
  • Best Slots On Bovada
  • Online Keno Real Money Usa
  • Online Slots Real Money Paypal
  • Best Poker Sites For Real Money
  • Safe Casino Sites
  • The Best Online Slots
  • Play Keno For Real Money
  • Real Online Pokies Australia
  • Queen Of The Nile Slots
  • Mummys Gold Casino Online Casino
  • Play Keno Online For Real Money
  • Best Poker Websites Real Money
  • Lucky Nugget Online Casino Download
  • Best Online Casino For Roulette
  • Play Roulette For Money Online
  • Video Slots Mobile Casino
  • Best Time To Play Online Slots
  • Best Real Money Online Poker
  • Play Blackjack Online With Friends
  • Play Baccarat Online For Real Money
  • Is Silver Oak Casino Legit
  • Big Fish Casino Real Money
  • Can You Win Real Money On Caesars Slots
  • Game Of Thrones Slots Casino
  • Best Online Slots Payout Percentage
  • Play Online Pokies For Real Money
  • Play Pokies Online Australia
  • High 5 Casino Real Slots
  • The Best Online Pokies
  • Online Pokies That Accept Paypal
  • Heart Of Vegas Slots
  • How To Play Online Roulette
  • Best Poker App Real Money
  • Best Online Casino Fast Payout
  • Best Slots At Wind Creek Casino
  • Online Casino 10 Minimum Deposit
  • Play Roulette Online For Money
  • Us Real Money Poker Sites
  • How To Win In Online Casino
  • Best Online Pokies Australia Review
  • Where To Play Roulette Online For Real Money
  • How To Beat Online Casino Slot Machines
  • Highest Payout Online Slots
  • Best Paying Online Casino Slots
  • Golden Tiger Online Casino Review
  • Online Casino With Live Dealers
  • Play Roulette Online For Real Money
  • Best Slots To Play At Casino
  • Slot Machine Games Win Real Money
  • Most Popular Online Casino Games
  • Casino Slots App Real Money
  • Online Casino Real Money Canada
  • Online Real Money Pokies
  • Online Roulette Game Real Money
  • Online Casino Roulette Real Money
  • Best Place To Play Roulette Online
  • Online Casino Book Of Ra Paypal
  • Online Blackjack With Real Money
  • Play Online Blackjack For Real Money
  • Is There A Slot Machine App For Real Money
  • Royal Vegas Online Casino App
  • Best Casino Slots To Play
  • Most Popular Online Slots
  • Best Way To Win At Slots
  • Slots You Can Win Real Money
  • Play Roulette Online Real Money Usa
  • Online Casino Real Money Paypal
  • Online Casino Australia Legal
  • Treasures Of Troy Slots
  • Online Casino For Us Players
  • Where Can I Play Blackjack Online For Real Money
  • Online Casino Paypal Book Of Ra
  • Online Roulette For Real Money
  • Best Online Blackjack Real Money
  • Poker App For Real Money
  • Jackpot Magic Slots Facebook
  • Best Online Casino Real Money Usa
  • Best Online Casino New Zealand
  • The Four Kings Casino And Slots
  • How To Play Slots Online
  • Best Online Pokies Australia
  • Usa Online Slots Real Money
  • Real Money Casino Android App
  • Online Slot Machines That Pay Real Money
  • Online Pokies Real Money Nz
  • Online Pokies Real Money App
  • Play Igt Slots Online
  • Best Casino Slots To Win Money
  • Online Casino Business For Sale
  • Play N Go Slots
  • Poker Apps For Real Money
  • Lucky Slots Real Money
  • All Slots Online Casino
  • Best Online Pokies Real Money Australia
  • Online Pokies Win Real Money
  • Best Online Casinos For Roulette
  • Pay Slots For Real Money
  • Best Online Poker Real Money
  • Slots App Win Real Money
  • Play Online Roulette For Real Money
  • Is Ignition Casino Legit
  • Wheel Of Fortune Slots Online
  • Lotsa Slots Real Money
  • Video Poker Online Real Money
  • Online Slots Usa Real Money
  • Play Blackjack Online Real Money
  • Jackpot City Online Pokies
  • Video Slots Online Casino
  • Is 888 Casino Legit
  • Online Slot Games That Pay Real Money
  • Prepaid Visa Card Online Casino
  • How To Stop Online Gambling
  • Best Slots To Play Online
  • Online Blackjack For Real Money
  • Slot Apps For Real Money
  • Mobile Slots Win Real Money
  • Newsletter Sign Up

    About Us

    Global Law Experts is dedicated to providing exceptional legal services to clients around the world. With a vast network of highly skilled and experienced lawyers, we are committed to delivering innovative and tailored solutions to meet the diverse needs of our clients in various jurisdictions.

    Social Posts

    See More:

    Contact Us

    Stay Informed

    Join Mailing List

    GLE