Inflation is hitting highs not seen in 30 years. Working families face high prices for gas and groceries just as the country struggles to recover from the global pandemic. Supply chain shortages, shipping delays, and labor issues put further pressure on an already strained economy and local industries, including the U.S. beer industry.
During the State of the Union, we expected President Joe Biden to offer long-term policy plans to address these problems. However, there is one concrete step Biden did not mention that he could take today to release some of the inflation pressure on consumers and manufacturers — he could repeal tariffs on aluminum.
According to a survey conducted in January on behalf of the Beer Institute by Bully Pulpit Interactive, a majority of registered voters (55%) in six key battleground states name the cost of living as a top concern. Eighty-six percent say the cost of living is headed in the wrong direction. Seventy-seven percent of voters in these states are concerned about affording food for their families. Further, those same voters are making it clear that policies that increase the cost of goods are unpopular, with 55% of those polled supporting a repeal of the 232 aluminum and steel tariffs.
Manufacturers, including those in the beer industry, are part of a global, interconnected economy. Tariffs increase the cost of household items and make goods less competitive.
Worse, tariffs threaten jobs and long-term investment in the United States. Since 2010, we have seen more than 10,000 new breweries permitted, and today, from agriculture and manufacturing to construction and transportation, the beer industry supports more than 2 million U.S. jobs and contributes more than $331 billion to the nation’s economy. Consumers are benefiting from the growing number of brewers and beer importers, with more choices for beer than at any other time in our nation’s history.
The tariffs increase costs on domestic brewers and put them at a disadvantage against their foreign competitors. In turn, local brewers are forced to make tough decisions, threatening their ability to invest and grow. These extra costs generated by the tariffs are especially painful during a time of astronomical inflation and a global health crisis. In 2020 alone, more than 568,000 jobs supported by the beer industry were lost due to the pandemic.
The cost of aluminum has dramatically increased over the last few years and continues to rise, hitting prices we have never seen before. These price increases come as the demand for aluminum is at an all-time high. More than 74% of beer manufactured in the U.S. is packaged in aluminum cans and bottles, and aluminum is the single largest input cost for American brewers. In 2020, brewers bought more than 41 billion aluminum cans and bottles, 4 billion more than before the pandemic.
Throughout the pandemic, brewers have contended with these problems and fought hard to keep the price of beer low for consumers. More than 40% of the price of a beer is made up of taxes, and despite supply chain issues, brewers have managed to keep beer on the shelves for consumers while keeping the price of beer consistently underindexed to inflation. In fact, recent Bureau of Labor Statistics data show that beer price increases have trailed price increases for all products since 1985, with the only exception in the early 1990s, when the federal government doubled the excise tax on beer. This trend of low beer prices continued last year, as beer’s consumer price index trailed the overall index, 1.8% to 4.7% on average.
Brewers are working tirelessly to maintain jobs, invest in the U.S., and keep their prices low for consumers. As the Biden administration looks for ways to help consumers, we encourage them to focus on policies that provide relief to working families and domestic job creators. Repealing the tariffs on aluminum would do just that.
Jim McGreevy is the president and CEO of the Beer Institute.
