U.S. President Donald Trump’s new 25 per cent tariff on Canadian steel and aluminum is fermenting a lot of stress at Burnaby’s Dageraad brewing.
“I’m worried,” co-owner Ben Coli told Global News.
“I’m worried about the future of the economy in general, and I am worried about what this is going to mean for my brewery.”
The problem? Most of the brewery’s beer, between 60 and 65 per cent, is packaged in aluminum cans.
A big price hike on every can is yet another cost increase Coli worries his industry just can’t take.
“The craft brewing industry has been really struggling for the last few years, we’ve had loads of cost increases and because of the economic uncertainty we’ve been facing we can’t really pass that on to consumers in terms of price increases,” he said.
“These cans could potentially be tariffed multiple times before we get them.”
That’s a factor of just how integrated North America’s economy has become, explained CJ Helie, president of Beer Canada.
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Canada, with a massive smelting capacity, is a major global exporter of raw aluminum — but does not have rolling mills, the manufacturing facilities that produce the thin, sheet aluminum used for cans.
“So in the case of a beverage can, a beer can, often the aluminum is smelted here in Canada, it is exported in virgin form to a U.S. manufacturer, who converts that to an aluminum sheet,” Helie explained.
“Then it’s either made into a can in the U.S. — and in the case of beer, all 473 ml cans, what we call a tallboy, are made in the U.S. — (or) the can sheets are often exported back to Canada and we will make the 355 ml can here in Canada.”
In either case, he said, Canadian brewers will be hit with a tariff, and if Canada retaliates with export tariffs of its own, they could face a “double whammy.”
That’s a big deal for the domestic beer industry, which has shifted away from bottles in recent decades, with the majority of products now packaged in cans, he added. Most modern small and mid-sized breweries don’t even have a bottling line, he added.
“It would be catastrophic,” he said.
The brewing industry is pressing both the provincial and federal governments for relief.
Ken Beattie, executive director of the B.C. Craft Brewers Guild said the industry has been working with the B.C. government for months in the hopes of a significant cut to the markup the province collects on beer.
“It’s eight years old, it’s unreflective of the market now — we built 160 breweries across the province, in over 80 communities since then,” he said.
“Costs in the beer industry have gone up on average 32 per cent, and we can’t raise our prices anymore.”
Beattie said B.C. breweries face a markup four times higher than their counterparts in Alberta. They’re pushing to see it slashed by between 23 and 75 per cent.
At a national level, Helie wants to see the federal government shelve a planned two per cent hike to the federal excise tax charged on beer.
It’s action that Beattie said is urgent for B.C.’s industry, which employs about 4,500 people across the province.
“The cost of doing nothing will be the continual closing of craft breweries in the province,” he said.
Trump’s steel and aluminum tariffs are set to take effect March 12.
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