How Trump's tariffs on steel and aluminum could hit you at the grocery store

From soft drinks and beer to aerosols and shelf-stable soups, many everyday grocery items sold in steel and aluminum cans could be in store for a price hike.

President Trump announced this month that he planned to impose a 25% tariff on all imported steel and aluminum in a bid to boost American producers by cracking down on foreign competition.

But food and beverage industry experts warn that driving up the cost of imported steel and aluminum could make it more expensive to manufacture cans in the U.S. — a price increase that will ultimately be passed on to consumers.

Ken Henricks, owner and president of Alter Brewing Co. in suburban Chicago, said the increasing cost of cans could hurt the craft beer sector at a time of rising inflation and growing competition from large beer companies.

"We just don't have any more room to give without raising pricing. And if we raise price, I know that with people's buying power being less today, our volumes will decrease," he said. "We're really at a tough spot."

The tariffs on steel and aluminum aren't new. In fact, it was Trump who implemented them during his first term in office. At the time, Trump put only a 10% tariff on aluminum and permitted some far-reaching exemptions to the steel tariffs, which the Biden administration kept in place. Now, Trump says, those exemptions are being removed and the aluminum tariff is being increased to 25% as of March 12.

The policy shift comes as consumers still face high costs for a range of products. Inflation rose again in January, with consumer prices increasing 3% year over year.

U.S. can production relies on foreign steel and aluminum

Steel and aluminum have a slew of uses across multiple industries, but the food and beverage business in the U.S. relies on both materials for cans.

The U.S. produces 135 billion metal cans each year, according to industry data provided by the Can Manufacturers Institute. That includes roughly 115 billion aluminum beverage cans and 20 billion steel cans for food and other products.

American can manufacturers source raw materials from both the U.S. and abroad. While imports account for only about 10% of the aluminum used by American can-makers, some 70% of the tin mill steel used to make steel food cans in the U.S. comes from foreign sources, which means makers of steel cans could see their prices rise more sharply.

Domestic production of steel and aluminum lags

If foreign steel becomes too costly, it will be hard for American producers to pick up the slack, according to Tom Madrecki, vice president of supply chain resiliency at the Consumer Brands Association, a trade group for consumer-packaged goods.

"The industry sources the majority of ingredients and inputs from U.S. sources, however, specialty products like tin mill steel can only be sourced from the European Union, United Kingdom, Canada and other countries due to lack of domestic supply," he said in a statement.

After Trump imposed tariffs on steel in 2018, nine American tin mill steel producers shut down, according to the Can Manufacturers Institute. Only three production lines remain open in the U.S. today, the group said.

Domestic aluminum producers could struggle to ramp up production too.

Charles Johnson, president and CEO of the Aluminum Association, praised Trump's efforts to uplift the industry, while adding in a statement, "Today, there is not enough smelting capacity in the United States to supply the growing aluminum industry with the input materials it needs."

Businesses wait to see how they'll be impacted

Kat Kavner Woolf, co-founder and CEO of Heyday Canning Co., is hopeful that can prices won't skyrocket. Her small business, launched at the end of 2022, uses steel cans for its soups and beans.

"The biggest thing for us right now is just the not-knowing," Woolf said. "And because we are small, we don't have a direct relationship with these suppliers that are pretty big. We don't have anyone that we can just pick up the phone and call and be like, 'Where is your steel coming from?'"

Henricks, of Alter Brewing, said he had recently been hoping to negotiate a lower price with his aluminum can supplier due to the growing volume of his order. But after Trump announced the tariffs, Henricks went into the meeting with the goal of simply holding his can costs stable moving forward. "I couldn't even get a commitment there," he said.

Breweries such as Alter could see prices rise for other materials they use as well. The Brewers Association, which represents more than 9,500 small and independent brewers, said in a statement that tariffs could also increase the costs of "fermenters, steel tanks, brewhouses, and building materials, while a 25% tariff on aluminum, the preferred packing method for many craft brewers, would further increase the cost of cans for small producers."

Costlier cans could mean higher prices and different packaging

Food and beverage industry experts warn that it's American shoppers who will end up paying for the tariffs at the cash register if steel and aluminum can prices rise.

Robert Budway, president of the Can Manufacturers Institute, said the tariffs will "create an inflationary impact on the consumer, who relies heavily on canned foods to meet their everyday needs of feeding their family nutritious, affordable meals." Madrecki, with the Consumer Brands Association, said the "impact of tariffs on steel and aluminum will be felt by [consumer packaged goods] manufacturers and consumers at the grocery store."

In a recent earnings call, Coca-Cola's chairman and CEO, James Quincey, said the impact of tariffs wouldn't be "insignificant, but it's not going to radically change a multibillion-dollar U.S. business."

In 2018, Coca-Cola and Boston Beer, the maker of Samuel Adams, said they were increasing prices after tariffs were announced, USA Today reported.

Yet on the recent call, Quincey also suggested that if aluminum cans became more expensive, the company could package more of its drinks in plastic bottles.

An estimated 8 million metric tons of plastic end up in global waterways each year, the vast majority of which is single-use plastics, according to the Natural Resources Defense Council.
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