US Lifts Aluminum and Steel Tariffs on Canada, Mexico

Nearly a year after imposing aluminum and steel tariffs against Canada and Mexico, the Trump administration today officially lifted levies imposed upon the two longtime trade allies.

On Friday, President Donald Trump announced plans to remove the tariffs — 25 percent on foreign steel and 10 percent on imported aluminum — as the three countries work toward the passage of a renegotiated North American Free Trade Agreement (NAFTA), now called the U.S.-Mexico-Canada Agreement. In turn, Canada and Mexico today lifted retaliatory tariffs against U.S. goods.

Ending tariffs on steel and aluminum imported from Canada and Mexico marks a significant moment for the beer industry, as about 43 percent of aluminum used by U.S. beverage companies comes from Canada, according to Washington, D.C.-based trade group the Beer Institute (BI).

Nevertheless, BI president and CEO Jim McGreevy said tariffs on aluminum and steel, which amount to a $350 million annual tax on the industry, need to be completely repealed.

During a wide-ranging panel discussion at Brewbound’s Brew Talks meetup, held last Friday in Washington, D.C., McGreevy called the exemptions for Canada and Mexico “a good start.” However, he said potential price irregularities already exist as beer companies have been overcharged for aluminum cansheet made mostly of scrap metal.

“We need to engage policymakers in a discussion — which we’re already doing — about the goofiness of how aluminum is priced and get that changed,” he said.

In a message to BI members on Friday, McGreevy wrote that beverage makers have been paying “a tariff-loaded Midwest Premium (MWP)” — the full logistical costs of shipping and storing the metal in the U.S. — on metal and cansheet made with 70 percent scrap.

“As long as this practice continues, it’s impossible to say if things will get better for American brewers, who need certainty and stability to compete,” he wrote.

This past March, the BI tapped Austin, Texas-based Harbor Aluminum — a research firm that specializes in the global aluminum industry – to study and estimate the cost of aluminum tariffs under section 232 of the Trade Expansion Act of 1962 since they were imposed on March 2018. Harbor found that the U.S. beverage industry paid about $250 million for aluminum cansheet between March and December. During the same period, however, the United States Department of the Treasury collected just $50 million, while U.S. smelters and rolling mills pocketed the rest.

Although President Trump has eased the tariffs on imported goods from Canada and Mexico, he has also escalated his trade war against China by increasing levies against $200 billion worth of Chinese goods. As such, the tariffs on several products being imported from China, including brewing equipment, have increased from 10 percent to 25 percent. In turn, China has threatened to raise its tariffs on $60 billion of U.S. goods beginning in June.

Leaders with the BI and the Brewers Association (BA) said they plan to file objections with the administration during a comment period that will remain open through mid-June. Paul Gatza, BA senior vice president, also suggested that brewers file comments with the administration.

“If you’re thinking about getting any brewing machinery from China, you should probably file a comment,” he said during the Brew Talks event.

McGreevy added that trade groups need to continue to advocate for changes and educate the Trump administration on the impact tariffs have on the brewing industry.

“There’s not going to be any end in sight for this, at least in the long-term. In the short-term, we do know that these newly revised exemption for Canada and Mexico on steel and aluminum says they’re at least open to listening a little bit,” he said. “So that’s a good thing. You just have to keep at them.”

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