Craft beer makers in Manitoba are expressing concerns over potential U.S. tariffs on aluminum, citing possible impacts on their narrow profit margins. Kevin Selch, the founder of Little Brown Jug Brewing Co. in Winnipeg, emphasized the significance of even slight price hikes in the manufacturing industry, where margins are already tight. Most brewers intend to absorb the increased costs initially to avoid passing them on to consumers.
Tyler Birch, founder of Barn Hammer Brewing Co., echoed this sentiment, indicating their willingness to bear the extra expenses for as long as feasible. The uncertainty looms over how long they can sustain this approach, with smaller breweries potentially facing devastating consequences if the tariff-induced cost pressures persist.
The current threat involves a proposed global 25% tariff on steel and aluminum by U.S. President Donald Trump, with a temporary pause on a similar tariff specifically targeting Canada and Mexico. The unique supply chain dynamics in Canada, where aluminum is exported to the U.S. for processing into cans before being shipped back, present challenges for local brewers.
While larger brewing companies may have more leverage to negotiate prices with suppliers, smaller breweries like Little Brown Jug Brewing Co. are more vulnerable to market forces. The last aluminum tariff in 2018 resulted in a significant increase in can prices, leading to concerns about a potential spike to 50 cents per can from the current 20 cents.
Amidst this uncertainty, breweries like Torque Brewing are cautiously evaluating their options, considering factors like storage space and financial prudence in bulk ordering cans. The Manitoba Brewers Association is exploring collaborative strategies to navigate the impending challenges, emphasizing industry solidarity in finding solutions.
The potential impact of tariffs on cross-border trade and interprovincial barriers is also a point of discussion, with brewers highlighting the need for streamlined regulations to facilitate market access and growth opportunities. Despite the apprehension surrounding the tariff threat, some industry players like Tyler Birch remain skeptical about its materialization, viewing it as a short-sighted policy move that may not come to fruition.
