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Trump's Tariff Decision Could Make Your Beer More Expensive: Here's How

Trump's Tariff Decision Could Make Your Beer More Expensive: Here's How

President Donald Trump announced Thursday new proposed tariffs on steel and aluminum imports. Naturally, this is seen as a positive for domestic steel manufacturers but behind the scenes one overlooked segment could be harmed: beer companies.

What Happened

MillerCoors said on Twitter it's "disappointed" with the proposed 10 percent tariff on aluminum. The reason behind this is simple: MillerCoors, owned by Molson Coors Brewing Co (NYSE: TAP), along with many other beer makers, use aluminum to make its cans. While the company said it uses domestic aluminum as much as possible there isn't enough supply to satisfy the demand from beer and other beverage makers.

Why It's Important

MillerCoors also said the American worker and American consumer would suffer from Trump's "misguided tariff." Anheuser Busch Inbev NV (ADR) (NYSE: BUD) echoed similar sentiments.

Similarly, a press release from the Beer Institute in February said the administration's proposed tariff would "dramatically increase the cost of aluminum in the U.S. and put at risk American jobs in the beer industry, as well other industries that are users of aluminum."

The Can Manufacturers Institute, a collection of multiple noteworthy beer and beverage makers, said in a public letter addressed to Trump it collectively produces 96 billion cans per year.

A tariff or quota on imported aluminum would have a "major negative impact" on the food and beverage industries. Specifically, a 10 percent tariff on aluminum would cost beer and beverage makers a combined $256.3 million in extra costs. A 20 percent tariff could cost companies an extra $512.5 million and a 30 percent tariff would cost companies $768.8 million.

"While we appreciate your concern about the viability of the domestic aluminum smelting industry, tariffs or import restrictions will have the unintended consequence of harming many healthy downstream U.S. manufacturing industries, like ours, that are substantially larger in size and economic contribution," the letter said. "In sum, tariffs or import restrictions on aluminum will hurt the U.S. economy more than they will help U.S. smelters."

What's Next?

The White House has yet to finalize a tariff and it's unknown if tariffs would be gradual. Nevertheless, Trump made it clear "everything would be completed by next week."

Related Links:

Credit Suisse: A 'Unique Opportunity' Makes Molson Coors An Attractive Stock

Reach For A Cold One: Analyst Weighs In On The Alcoholic Beverage Sector


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