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Craft breweries in the United States, known for their creativity, quality, and connection to local communities, face a new and significant challenge that could jeopardize their economic viability.
The recent 25% tariffs imposed by the federal government on steel and aluminum imports, as part of a protectionist trade policy, threaten to increase production costs for these small businesses.
Both materials are essential for the production, storage, and packaging of their beers, raising concerns in a sector that has already faced multiple obstacles in recent years.
The craft beer industry, once a thriving sector, has been hit hard by a series of crises. The COVID-19 pandemic severely impacted sales in bars and restaurants, forcing many breweries to rely more on packaged sales, such as cans and bottles.
Subsequently, global supply chain issues caused shortages and drastic price increases for key inputs, including aluminum cans.
Additionally, changes in consumer preferences, with many now favoring alternative beverages like hard seltzers and ready-to-drink cocktails, have further reduced demand for craft beer.
In this context, the announced tariffs represent another blow to the sector. According to industry association data, 75% of craft beer volume is distributed in aluminum cans, many of which come from countries like Canada, one of the main suppliers of this material to the U.S.
Furthermore, Canada and Mexico account for nearly 40% of the country’s steel imports, a crucial material for the production of barrels, tanks, and brewing equipment.
Trade and economic experts have pointed out that the tariffs could significantly impact the prices of aluminum and steel, directly affecting U.S. businesses that rely on these inputs.
Although proponents of these policies argue that they aim to strengthen the domestic industry and protect local jobs, previous tariff experiences have shown the opposite: prices for steel and aluminum increased, even for U.S.-made products, harming small breweries already operating on thin margins.
In cities like Chicago and Boston, craft brewery owners have expressed concern about the impact of the tariffs. In 2018, can prices rose significantly, even though many breweries purchased domestic products.
This time, with cans coming from Canada, an even greater increase is expected. To cope with this situation, many breweries are adopting strategies such as bulk purchasing and limited storage, but these measures are insufficient to counteract the expected price hikes.
In states like Massachusetts, smaller breweries are already feeling the pressure. Many of these businesses lack the capital and storage space to buy materials in bulk, making them more vulnerable to price increases.
If the tariffs remain in place, they are likely to result in higher prices for consumers, tighter budgets for local breweries, and a direct threat to the jobs and survival of these small businesses.
Master brewers have emphasized that the industry is reaching a tipping point. Costs are already at the limit of what the market can bear for craft beer, and any additional increase could be devastating.
Moreover, stainless steel, essential in the beer brewing process, will also be affected by the tariffs, further driving up production costs.
Current trade policies, although aimed at protecting the domestic industry, could have the opposite effect on craft breweries.
Instead of strengthening small businesses, the tariffs could stall their growth and raise barriers to entry for new entrepreneurs.
This could limit the emergence of new independent breweries, which often serve as community spaces and innovation drivers in the industry.
In summary, the new tariffs represent an additional challenge for an industry struggling to recover from the impacts of the pandemic, supply chain issues, and shifts in consumer preferences.
If costs continue to rise, the outlook for small craft breweries, which are pillars of local communities, could become even more complicated, limiting their growth and threatening their survival.
