Minnesota's craft brewers on edge with aluminum and steel tariffs looming

Yahoo

19-02-2025

President Donald Trump is, again, planning to impose tariffs on imported steel and aluminum. The plan revealed last week for 25% tariffs beginning March 12 echoes a similar move made in 2018 during his first term.
It's familiar territory for many businesses, including brewers, who worry that tariffs will impair an industry already running on narrow margins.
In Minnesota, many breweries are on edge as they prepare to relive the production pains experienced in 2018 and again during the pandemic as can shortages drove up prices.
'I don't want to go back,' Ryan Bandy, Chief Business Officer at Indeed Brewing Company, tells Bring Me The News. 'What's scary is I don't actually know yet how this is going to impact us. We're still tracking down our suppliers to see where they get their aluminum from, what impacts they are going to have, and asking nicely/wondering if they're going to pass it on to us or not. We don't really know yet. But 25%? If that's true, we're going to get hit.'
While some companies, particularly those in need of steel, may scramble to increase the amount of materials sourced from U.S.-based companies, much of the aluminum used for cans is sourced from outside the country.
Moreover, the New York Times reports that White House officials say there will not be exclusions written into the tariffs that could insulate some businesses.
"We don't have 2% or 3% to spare in our manufacturing," Bandy says. "It's kind of a scary moment to be waiting a little bit. It's out of our control."
He notes that larger breweries may prepare by placing large orders before tariffs go into effect, but that smaller craft breweries aren't likely to have the capital or space to stock up.
The uncertainty and fear are being felt across the industry. The Brewers Association, a trade group representing more than 5,000 American breweries, in response to the tariff announcement, noted that the U.S. imports more aluminum from Canada than any other country.
In 2018, Canada was excluded from the Section 232 tariffs — they are not excluded this time — but even with the exclusion, "there were across the board price increases on raw aluminum, impacting the price of aluminum cans," the BA says, adding that in early 2025 data, approximately 75% of packaged craft beer is sold in aluminum cans.
Fewer and fewer breweries use bottles, especially as breweries continue to diversify offerings to include hard seltzers, canned cocktails, and non-alcoholic options.
In Minnesota, that diversification includes THC drinks. All of those categories tend toward cans, and breweries that use bottles often feel pressure from retailers and consumers to move to cans.
Fulton Brewing in Minneapolis is one of the few craft breweries in the state that offers drinks in bottles and cans, but CEO Ryan Petz tells Bring Me The News that it will move toward using cans exclusively over the next few months.
"That's a market-based decision that we made," Petz says, adding that can sales continue to grow and that their bottle sales have declined. 'Stores will only have bottles or cans from a brewery. They're not usually going to have both, at least from smaller breweries."
Moving away from cans to bottles isn't possible for most small breweries, as the packaging equipment is different and requires significant capital investment.
"From an operational standpoint, they're completely distinct filling and packaging lines," Petz says. "They're expensive to operate and maintain and staff and to have duplicative lines for something that we think we can replace the volume of the bottles with just adding more cans, it kind of became a no-brainer over the last year or so [to get rid of bottling lines].'
During the panemic can shortage, Fulton considered moving to bottles, but they ultimately found a supplier and kept using cans.
'It more than doubled the cost of our cans by the time they got to us, and it's a huge input cost for us,' Petz says. 'This time around, to be honest, I couldn't even tell you what we're expecting as far as if these tariffs hold up, what the impact on the price of a finished can for us would be. Though I don't think, based on what I understand, it would be as bad as last time.'
However, that doesn't mean craft brewers will be able to absorb production cost increases. 'We've, businesses and consumers alike, dealt with enough inflation over the last few years that it feels like you've been squeezed enough and don't want to have to feel anything further,' Petz adds.
Aluminum may be a more pressing matter, but steel duty, too, would impact brewers. From tanks to kegs, kettles to building infrastructure, steel is omnipresent inside breweries.
'I don't think craft brewing, including us, we're not doing a lot of capital expenditures right now, like buying lots of tanks,' Bandy says. 'At the same time, we have to fix things all the time, and all of that is steel. Most of it, even if part of it is American-made or of American manufacture, there's things from all over the world probably going into it.'
The Brewer's Association adds that retaliatory tariffs have the potential to make things even more difficult on the industry. Canada accounts for 37.5% of American craft beer exports, it says, and the previously threatened tariffs against Canada were already raising alarms.
Taken as a whole, the tariffs appear to be aimed at China, according to industry reports. However, while China is the world's largest producer of steel, the U.S. imports relatively little from the country.
According to U.S. Census Bureau data, China ranks ninth among nations that export steel to the U.S., providing only 1.8% of the imported steel in 2024. It sits third in aluminum. However, the U.S. imported 3.2 metric tons of aluminum from Canada last year and just 223,000 metric tons from China.
The New York Times reports that American iron and steel producers are operating at approximately 70% of capacity. That had briefly reached 80% during Trump's first tenure, but it has fallen some, a change the Times attributes to underpriced Chinese exports.
'These are real things that will have real impacts,' Bandy says. 'And it's not a good time for negative impacts on our industry. We could use some positive impacts. It's a little bit of wait-and-see, which is kind of horrifying, but it's all we can do.'
In 2024, for the first time in nearly two decades, the number of craft breweries in the U.S. declined. It's leading to fears not only of dwindling margins but how consumers will respond if the price of beer and other products manufactured by breweries go up again.
"This is a big deal," Trump said when announcing the tariffs on Feb. 10, per CNN, "making America rich again."