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Trump Tariffs Could Increase the Price of Beer

We learned today that President Trump's new tariffs on metals could increase the price of beer, and analysts are speculating that beer drinkers will turn to other alcoholic beverages, like wine.

I bet that's got Trump's "despicables" jumping for joy. My guess is that by far the majority enjoy a cold brew now and again, and wine? Probably not so much. Admittedly, that's just my guess based on my own stereotyping, to which I plead guilty.

The culprit is Trump's 10 percent tariff on aluminum and 25 percent tariff on all types of steel. A ton of beer comes in aluminum cans, and the beer industry uses a lot of steel in its breweries, so the 25 percent hit on steel will be a big deal.

“We are concerned about the steel tariff equally to the tariff on the aluminum,” Brewers Association (BA) president Bob Pease said. “It’s a 25% tariff, so it’s more dramatic.” Mexico, Canada and the European Union responded with retaliatory tariffs against American products.

Earlier this month, Jim McGreevy, president and CEO of the Beer Institute, said aluminum prices have increased by 135 percent since the start of 2018. Thursday's news "will only lead to more uncertainty in the aluminum market," he cautioned. "Over the long run, these tariffs will drive aluminum prices higher globally, increasing the cost of beer production for all brewers. The tariffs are already having an immediate and disproportionate impact on American brewers and American jobs."

More than Beer

Of course, beer is just one product - albeit an important one -- that will be affected and will cause consumer prices to increase.

MONEY went to economists for some answers.

“There’s no question this is a hit to consumers,” said Lawrence White, an economics professor at New York University’s Stern School of Business. “Sooner or later prices will reflect those increased costs of steel and aluminum.”

A tariff is a tax on foreign goods and Trump’s new tariffs will mean a big cost increase on raw materials that are used to make everything from cars to houses to keychains, MONEY said. Companies can be expected to pass on their higher costs to consumers. Doesn't take a genius to figure that one out.

So let me get this straight. Trump is imposing these tariffs on products to "save" American jobs. But the companies that are affected say they will actually cost jobs. And on top of that, the products these newly unemployed blue collar workers customarily purchase -- like beer -- will get even more expensive. Plus, other countries are retaliating against the U.S., making our products more expensive in their countries and potentially costing even more U.S. jobs.

Is it just me? I can't figure out how that helps -- or why Trump's supporters would be happy. Maybe somebody can fill me in.

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