Business craves certainty. CEOs like low taxes and laissez-faire regulation. But if taxes remain high and regulations robust, they can plan for it. Everyone is in the same predictable boat. The playing field is level. However, certainty is not a feature of Trumponomics. America's craft brewers — and every other business that relies on imports for ingredients and packaging — now live with uncertainty as a cost of doing business.
Beer comes in aluminum cans, glass bottles, or steel kegs. Which one a brewer uses depends on both customer preference and the cost and availability of materials. This consideration brings us to US craft brewer Bill Butcher, founder of Port City Brewing Company in Virginia. He is faced with a shortage of beer bottles — and has no way to predict his business costs. He is not alone.
The Agency France-Press reports:
From Canadian malted barley to aluminum beer cans, Trump's tariffs have hit multiple products that American craft breweries need, buffeting businesses in the world's biggest economy.
Turbulence in supplies could ultimately translate to higher beer prices for consumers, brewers warn, even as importers and breweries try to absorb additional costs triggered by the levies and their consequent supply shocks.
Similar conditions are playing out in various industries across the country, including construction and appliance production.
In Trump's latest salvo, 25 percent levies on US steel and aluminum imports took effect this week.
Butcher shares the view from his office.
"As the aluminum tariffs have kicked in, the major beer suppliers in the country are switching a lot of their production back to bottles."
As any Econ 101 student knows, higher demand leads to shortages in supply and higher prices when the supply is available. Not only is Butcher facing a dearth of bottles, he will have to pay more for cans. No wonder he says:
"There's a lot of uncertainty. There's a lot of chaos that's been injected into our supply chain.
For Butcher, uncertainty also lingers over the cost of the Canadian pilsner malt that forms the base of his beers -- and the bottle caps he imports from Mexico. He told AFP it has become:
"Impossible for us to plan out our business, our production, if we don't know what the price of our supplies are going to be."
Butcher did catch a break. While both products were hit by Trump's blanket tariffs on Canadian and Mexican goods this month, his partial rollback of them within days has allowed Butcher temporary relief. However, this probably temporary cost relief will do nothing to alleviate the unpredictability craft brewers — and thousands of other businesses — face.
Trump's apologists say this economic uncertainty is part of a 3-D chess master plan. Nice try. Having a plan means you know what you will do in the future. Trump has no clue what he will do tomorrow. Analysis and expertise do not guide him. He is a thin-skinned, exposed nerve that will react to every imagined slight with unthinking stupidity. And he is a bottomless well of ego-stroking need. He will metaphorically roll over for anyone willing to stroke the mangy fur on his doughy stomach — probably in reality, too
Justin Cox, founder of Atlas Brew Works, who packages his beers in aluminum cans, estimates their price form about a third of the total cost for a case of 24 beers. As even rocket scientists know, aluminum tariffs add to packaging costs in; as Cox says:
"what's already a small-margin product going into the wholesale market." Adding: "All of this ends up with a higher price of our beer on the shelf."
Note: Cox means packaging represents 1/3 of his cost to produce a case of beer — not 1/3 of the retail price. This dominance of packaging cost in the production expense of a consumer good is particularly steep in cosmetics. As the philosopher observed, the most expensive part of a bottle of fragrance is the bottle.
Butcher and Cox warned that small businesses like theirs have limited storage capacity — and less cashflow — making it harder to stockpile inventory to cushion the blow from tariffs. Cox pointed out that:
"We can only hold so much in our small space, and a minimum order on aluminum cans is a full truckload."
He added that the pricing of cans is also subject to flux. Breweries are billed for the final product after production, which can be weeks after orders are placed.
"We're having to just sit and watch, and hope that things get better before it's time for us to order (more)."
To recap (pun unintended), Trumponomics means a craft brewer has no predictability in the pricing of their raw materials or the cost and availability of their packaging. Other than that, no worries — except for the usual sharp elbows of their competitors.
Business is tough at the best of times. Now, thanks to Trump's belligerent ignorance and truculent incompetence, American companies are handicapped by a self-congratulatory bozo mistakenly convinced he knows what he is doing. It doesn't help that his entourage keeps telling the deluded man he has clothes on.
