U.S. Implements 25% Tariff on Imported Canned Beer and Aluminum Cans
Effective Friday, the Trump administration has announced a 25% tariff on all imported canned beer and empty aluminum cans, according to a release from the Department of Commerce. This move expands existing tariffs on aluminum imports and coincides with an upcoming Rose Garden address by President Donald Trump, where further measures on imported goods are expected to be revealed.
Impact on Industry Leaders
Analysts predict that the new tariffs will significantly affect Constellation Brands, a major player in the beverage market that relies on imports from Mexico for its beer brands, including Modelo and Corona. Notably, beer sales comprised 82% of Constellation’s revenue in its latest financial report. Although Corona is widely recognized for its glass bottle packaging, Modelo, the best-selling beer in the U.S., is predominantly sold in cans.
As concerns surrounding the tariff escalated, Constellation’s share price fell less than 1% in midday trading on Wednesday. However, the stock has endured a 22% decline since Trump’s election in November, reflecting ongoing investor anxiety regarding the tariffs.
Current Market Trends
The recent tariff announcement does not mention any additional duties for imported beer sold in glass bottles. As reported by the Beer Institute, canned beer represented 64.1% of the beer distribution market in 2023, dwarfing the 26.9% share held by glass bottles. The shift towards canned beer has been evident for years, primarily due to the lighter weight of cans compared to glass, leading to reduced production and transportation costs.
Sources of Aluminum Imports
The United States primarily sources its aluminum from Canada, with China and Mexico also being significant exporters. The newly announced tariffs further escalate trade tensions with these nations, particularly as they fall under the scope of President Trump’s administration’s broader trade strategy.
Conclusion
As the U.S. government prepares to enforce new tariffs, stakeholders in the beverage industry must brace for the potential effects on pricing and supply. Constellation Brands and other affected companies will likely need to strategize accordingly to navigate the evolving landscape in the wake of these trade policies.