I was watching the local news when I heard a report that hit me to the core.
A local microbrewer was explaining that they were being forced to raise the price of my favorite beer by $2 a case.
That piqued my interest, to say the least. Upon listening further, it became apparently clear the reason for the price hike was due to the rising cost of aluminum cans.
Again, I was glued to the TV to find out why.
The aluminum and steel tariffs are set to come into effect on March 12 (at 12:01 a.m. Eastern Standard Time to be precise). The tariffs will impose a 25% duty on all imports of aluminum and steel into the USA.
And that has a knock-on effect to my favorite libation! Apparently, the cost of the can I was now gently squeezing in my fist is 65% of the costs associated with my beverage of choice.
That’s 65% x 25% of a can of beer. Talk about a sobering mo
What are the downstream impacts?
But it is not only me that will be crying into my drink. The effects of these tariffs are significant and wide ranging.
On the beer can half empty side:
- The Automotive Industry is estimating the cost of a new car could increase by between $4,000 – $12,000, which will in turn increase both the demand and price of used car prices as buyers seek cheaper alternatives.
- Manufacturing sectors like industrial equipment manufacturers and household appliance producers are some of the hardest-hit industries, as they rely heavily on imported steel and aluminum. The tariffs increase production costs for these manufacturers, potentially leading to higher prices for consumers and decreased employment in these sectors.
- The construction industry, which employs over 10 million Americans, is significantly impacted as increased steel cost make building projects more expensive and will potentially slow down construction activity and impact overall demand.
- Consumer prices are expected to rise: As higher manufacturing costs are likely to be passed on to consumers, resulting in price increases for various products, including vehicles, canned products (including my beer), home appliances and construction materials.
But on the beer can half full side:
- Recycling sector: In the short term, the tariffs may benefit the recycling industry by increasing demand for domestic sources of these metals, such as used beverage cans and containers.
- Domestic metal industries: In the longer term, the goal is for U.S. steel and aluminum producers to benefit from reduced foreign competition, potentially leading to increased domestic production and job growth in these sectors.
These knock-on effects highlight the complex and far-reaching consequences of the aluminum and steel tariffs across various sectors of the economy and international trade relationships. Only time will tell!
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