Aluminum Tariffs Threaten Jobs and Beer In the United States
For many, enjoyment of an ice-cold beverage in an aluminum can is a simple and rare moment of pleasure amid the current turmoil. Yet, some special interests in Washington are encouraging President Trump to impose tariffs on Canadian aluminum which could make an existing shortage of aluminum cans much worse. One of the first rules of politics is to try not to make a bad situation worse. Especially one that makes it harder or more expensive for people to enjoy their favorite beverage, whether it’s Cherry Coke or Budweiser. The president should avoid this landmine.
Trump loyalist and campaign advisor Andy Surabian rang the alarm bell on this issue two weeks ago. He uncovered that a Clinton-linked global company was behind a swamp campaign to convince Trump to raise tariffs on Canadian aluminum. Why? Because higher prices on aluminum and less market access for Canada means the global trading behemoth Glencore gets higher prices for the aluminum it makes in the U.S., the metal it puts in its warehouses in Baltimore and New Orleans becomes more valuable, and it receives new market opportunities for the aluminum it buys from Russia and sells in the U.S. This policy strategy represents a three-point gamer-winner for Swiss billionaires but higher prices and potential shortages for the rest of us.
Glencore and its advocates are trying to convince Trump to whack the Canadians because they allege there has been a “surge” of aluminum from our neighbor to the North that is making prices too low. Glencore and its US subsidiary Century Aluminum have stated they want aluminum prices to go up to “save” the smelters they own. True, there are American workers these smelters, but even the Steelworkers and Machinist unions who represent aluminum smelter workers say the real problem is China, not Canada.
This ill-advised trade move comes on top of a flurry of news reports that beverage makers from Coca-Cola to local micro-breweries are already facing a shortage of aluminum cans. A Fox New report showed that some beer makers have already moved production away from smaller brands to keep bigger brands from going out of stock. Business Insider warned last week that industry analysts believe that the can shortage is due to more people buying beer and other beverages in the light metal containers and more people taking to low-calorie alcoholic drinks like White Claw.
Canada is the largest supplier of aluminum to the U.S. and has done so since American financiers and entrepreneurs built the Canadian aluminum infrastructure before World War II to harness cheap hydroelectricity in Quebec and British Columbia and supply the allied war effort. The biggest cost of producing aluminum is energy, so it makes sense Canada produces most the U.S. aluminum given their lower cost of hydropower relatively small population. U.S. smelters, struggling under high energy prices, produce just under 1 million tons of aluminum. Last year the U.S. consumed over 5 million tons. So, we have to buy the difference from somewhere. Canada is our long-standing ally, USMCA trade partner, and neighbor. Would US trade officials prefer aluminum from Russia or China?
The details of trade policy are not going to matter if there is a run on six-packs at Costco or there is job loss in my home state of Georgia, where thousands of employees depend on Coca-Cola and local breweries. People are going to want to blame someone. If President Trump puts tariffs on Canada, they aren’t going to “Blame Canada,” they will, unfortunately, blame President Trump. Let’s hope someone in the White House or Trump campaign talks some sense into him before there are lines out the door at 7-11’s.
