Beer Institute Calls For Investigation into Aluminum Pricing

In the continued fallout of President Donald Trump’s tariffs on foreign aluminum and steel, the Beer Institute (BI) is now calling on the Department of Commerce, the Department of Justice and the Federal Trade Commission to investigate anticompetitive activity in the aluminum market.

In a May 18 letter to the Department of Commerce, the BI, a national trade group representing the interests of large and small brewers as well as industry suppliers, asked the trio of government agencies to “ensure that effective mechanisms are in place to deter and redress any anticompetitive conduct in the market related to the Section 232 tariffs.”

Specifically, the BI pointed to the Midwest Premium, a survey of traders and producers conducted by Standard & Poor’s-owned company Platts that is used to determine the price of aluminum by factoring in the cost of transporting, storing and delivering the metal.

“One company sets the Midwest Premium, and it’s essentially done behind closed doors with the input of aluminum traders and aluminum producers who have a financial interest in seeing a high Midwest Premium,” Beer Institute CEO and president Jim McGreevy told Brewbound. “This is just a place where speculation and chicanery can happen, and we think it is.”

The BI’s comments to the Department of Commerce were sent three days after Molson Coors chairman Pete Coors wrote an op-ed in the Wall Street Journal calling on the Trump administration to end the Midwest Premium, which he referred to as a “mysterious fee” added to all aluminum orders. According to Coors, the Midwest Premium has increased by 140 percent since January, to 23 cents per pound.

“It is time to fix this mess and end the premium once and for all,” Coors wrote.

McGreevy added that the Midwest Premium is “a device to speculate and artificially inflate the price paid for aluminum.”

“We are seeing that happening,” he said. “We hope that the administration and the Congress will shine a light on this through the powers that they have and maybe even regulate it if the folks who are setting the premium are unwilling to reform themselves.”

In its comments, the BI argues that the spike in the Midwest Premium has made the U.S. market “more attractive to global aluminum suppliers, which draws additional supply into the market, undermining the Department’s Section 232 remedy.”

President Donald Trump imposed the tariffs — a 10 percent duty on aluminum and 25 percent levy on steel — on March 8. However, the administration had continued to take comments on its interim final rule through May 18 and must now sift through thousands of exemption requests before formulating a final rule. McGreevy added that the government has already begun collecting the tariffs despite the comment period ongoing.

“That’s different than how most federal regulation works,” he explained. “Usually, there’s a plan to implement some regulatory process, the rule is filed as a draft, those interested are able to comment on it and then at some point a final rule comes out. In this case, the tariffs were implemented seven weeks ago, and the government is still trying to hash out the process. We think that’s bad policy.”

What’s at stake is about $350 million in costs for the beer industry, McGreevy said, and “beer is literally taking one for the team — the team being the U.S.”

“If the president is right and the aluminum smelting industry can return to the United States in some way based on these tariffs being implemented, I guess that would be an OK result,” he said. “But there’s certainly no evidence to this point that that will happen, and we have economic consequences today in beer because of this tariff.”

The BI’s comments to the Department of Commerce also seek changes to the product exclusion process that would allow trade associations to file consolidated exemption requests for their members and individuals, and organizations to submit comments in support of other parties’ exclusion requests. The BI also is seeking assurances that confidential and proprietary information shared in the process will remain protected.

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