Trouble is brewing for local beer companies as Trump slaps tariffs on aluminum
The math is tight for Thom Cheston. Standing inside the walk-in fridge that stores the beer to be shipped across the Washington, D.C., area, he runs through a few numbers.
He says his business, Right Proper Brewing, has to sell more than $6,000 of beer just to cover the taxes on his brewery. He's hesitant to raise prices because his competitors, most notably the big breweries, might not. And so having to pay more for the aluminum cans that ship his brews is a scary proposition.
President Donald Trump's 25% tariffs on steel and aluminum took effect Wednesday, and one of the places Americans touch aluminum most directly is in canned drinks. This increase in the price of canning material could dramatically hit the bottom line of many businesses, such as craft breweries.
'We can't raise our prices just because our costs have gone up,' Cheston said. 'We may be on the shelf next to breweries that are much larger than us, that may be in a better position to absorb those costs, whereas we are not.'
Cheston, like many small-business owners across the U.S., faces the prospects of rising costs in crucial pieces of the operations due to the escalating trade war that Trump has started with many of the U.S.' biggest trading partners.
'It could be massive,' Cheston, who co-founded Right Proper Brewing in 2013 as a neighborhood brewpub in Washington, D.C., said. The company has two locations and plans to open a third.
While bottles are still an option, craft brewers have been shifting to cans for many years. For Cheston, the tariffs could mean the difference between being able to hire an additional employee or being able to buy necessary equipment.
Cheston said that even 50 cents makes a difference when customers are choosing a beer off a grocery shelf.
'Roughly, if we were to incur a 25% increase in that cost, it would be over $40,000 for us, which is the cost of an employee,' he said of the tariffs. Right Proper's packaging is provided by a third party that sources their aluminum in Canada.
'What we pay per piece is subject to the aluminum index, and so if that goes up, we pay more,' he told NBC News. 'We have a few months of cans and inventory right now, but beyond that, there's nothing we can do.'
Cheston is competing for shelf space with other small craft breweries as well as larger companies, such as Molson Coors and Anheuser-Busch. Molson Coors has the ability to source its cans domestically and would not be affected by the tariffs.
'While we continue to evaluate the implications of possible tariffs, with respect to aluminum, we source our cans from a number of domestic suppliers, so our exposure to any tariffs on imported aluminum to the U.S. would be minimal,' a company spokesperson told NBC News.
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