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Executives from four major beer suppliers in the US have sent a letter to President Joe Biden asking for an end to the 10% aluminum tariff on imports from many metal-producing countries, arguing that the tariff has cost the domestic beer industry billions of dollars since 2018, the Beer Institute said July 5.
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"The beer industry uses more than 41 billion aluminum cans annually, given the competitive nature of the beer marketplace in America today," a Beer Institute spokesperson said in a statement to S&P Global Commodity Insights. "Consumers have more choices in beer than at any time in our history, and they are increasingly choosing to consume them from aluminum cans."
The US beverage industry has paid more than $1.4 billion in aluminum tariffs since 2018 through its purchase of aluminum for cans, the spokesperson added.
Former US President Donald Trump enacted the 10% tariff on aluminum imports from most countries, along with a 25% steel tariff, in 2018 under Section 232 of the Trade Expansion Act. Since then, some countries have been exempted from the tariff or granted an annual quota allowance for a certain volume of duty-free imports.
The letter to Biden, dated July 1, was signed by top executives of beer suppliers Anheuser-Busch, Molson Coors, Constellation Brands Beer Division and Heineken USA, all of which belong to the Beer Institute. In the letter, the executives said they agreed with recent comments from Commerce Secretary Gina Raimondo suggesting that a lifting of various tariffs could serve as a potential solution for some of the US' recent economic challenges with inflation.
"As the CEOs of leading beer suppliers in the United States, who employ tens of thousands of Americans, including many organized labor jobs, we agree with Secretary Raimondo that tariff relief results in inflation relief," the letter said. "While our industry is more dynamic and competitive than ever, aluminum tariffs continue to burden breweries of all sizes."
The executives said that the full elimination of the aluminum tariff would "alleviate pressure and allow us to continue our vital role as strong contributors to this nation's economy."
The letter extends on a previous call from the Beer Institute in April urging the Biden administration to repeal the aluminum tariff.
Quota deals fall short of solution
The Biden administration has moved to partially relax the aluminum tariff with certain trading partners. For instance, the US replaced the aluminum tariff with a tariff-rate quota on imports from the EU in late 2021 and on imports from the UK in March. The quota allows a certain volume of aluminum to be imported into the US duty-free each year.
Canada and Mexico are also not subject to the aluminum tariff at all.
However, the beer industry executives said aluminum producers still charge a tariff-burdened price, even if their product is not subject to duties based on origin or quotas.
"Just as concerning is that of the $1.4 billion ostensibly paid in tariffs, 92% did not go to the US Treasury," the letter said. "We applaud your administration's efforts to negotiate lifting tariffs off individual countries. However, those efforts to provide economic relief to American consumers have no effect if end-users, such as US brewers, are charged a tariff-burdened price regardless of whether the metal should be tariffed based on its content or origin."
The Platts spot 99.7% P1020 US Aluminum Transaction Premium was assessed at 30.65 cents/lb plus LME cash, delivered Midwest, net 30-day payment terms, July 1, according to data from S&P Global Commodity Insights. The premium peaked at 40.10 cents/lb in March and April after averaging 26.38 cents/lb in 2021, almost triple the average of 9.01 cents/lb in 2017 before the tariff was implemented, according to S&P Global data.
As of July 1, the 10% import duty accounted for an estimated 12.297 cents of the overall P1020 premium, with the implied duty-unpaid premium at 18.353 cents. The import duty estimate averaged 13.01 cents/lb in June and reached a record 17.64 cents/lb in March.
The letter referred to a report from the Peterson Institute, which argues that "like tariffs, TRQs have the same effect of curtailing imports and keeping domestic prices artificially high," thus minimizing the intended impact of the Biden administration's trade deals.
The executives said the rising aluminum prices caused by tariffs ultimately get passed through the supply chain and impact consumers.
The 10% aluminum tariff has brought imports down from record shipments in 2017, when the US imported 6.87 million mt of aluminum, according to data compiled by the US International Trade Commission.
After the US implemented the tariff, aluminum imports fell to 6.16 million mt in 2018, 5.86 million mt in 2019 and 4.9 million mt in 2020.
Imports then rose to 5.56 million mt in 2021 and currently total about 2 million mt in 2022 year-to-date through April.
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