The U.S. war on trade (not to be confused with our wars on drugs, terror, etc.) escalated last Friday. The Trump administration released two lists worth $50 billion in Chinese imports that would be and could be subjected to a 25 percent tariff. According to the administration, the two lists “generally focus on products from industrial sectors that contribute to or benefit from the ‘Made in China 2025’ industrial policy, which include industries such as aerospace, information and communications technology, robotics, industrial machinery, new materials, and automobiles. The list does not include goods commonly purchased by American consumers such as cellular telephones or televisions.”
The initial list of tariffs was much larger, but after hearing from trade associations and business experts, the United States Trade Representative (USTR) removed 515 items (the original list had 1,333 items). According to the Brewers Association, some of those removed included certain steel items that are used in making brewing vessels and equipment.
China has already announced retaliatory tariffs on $34 billion worth of U.S. goods, including agricultural products and automobiles, with plans to bring the full amount of the tariffs to $50 billion. Beer is not included in China’s retaliatory lists.
For most of 2018, the United States and China have been going back and forth on trade issues, sometimes threatening tariffs and sometimes suspending them. Items related to brewing are not included in these initial tariffs, but as negotiations between the U.S. and China continue, there is always a possibility that equipment used by the brewing industry could be affected.
The final 818 items in the tariff list cover approximately $34 billion worth of imports from China. That list will go into effect July 6. Of course, there’s another set of 284 proposed tariff lines (worth $16 billion) that will undergo further review in a public notice and comment process. Tariffs on steel (25 percent) and aluminum (10 percent) products are two of the biggest headliners in these trade and tariff negotiations. Just this week, MillerCoors estimated premiums on aluminum could cost the company $40 million. MillerCoors CEO Gavin Hattersley noted it could affect smaller brewers in worse ways. From the Chicago Tribune:
“There are 6,000 small brewers out there that are seeing a shift into cans, which is going to dramatically increase their costs,” Hattersley said. “They can’t hedge like the big guys do. They’re forced to pay these outrageous Midwest premium increases, and their ability to change their business model is quite difficult.”