Trouble Brewing: How Trump’s Liberation Day Tariffs Are Impacting Craft Beer

The craft beer industry, long celebrated for its creativity and community-driven ethos, is facing a new challenge in 2025: President Donald Trump’s “Liberation Day” tariffs. These sweeping trade measures, including a universal 10% tariff on imports and targeted levies of up to 25% on steel, aluminum, and goods from Canada and Mexico, have sent shockwaves through the brewing world. For an industry already grappling with shifting consumer preferences and post-pandemic recovery, the tariffs could reshape the landscape of American craft beer. (See our previous article – Trump’s Tariffs, posted November 2024.)

The Tariffs Explained

President Trump’s “Liberation Day” tariffs aim to protect domestic industries by imposing broad import taxes. However, their impact on craft brewing is particularly severe due to the industry’s reliance on imported materials:

• Aluminum Cans: A 25% tariff on imported aluminum directly affects breweries that use cans for packaging. Nearly all cans used by U.S. brewers are sourced internationally, making this tariff a major cost driver

• Steel Kegs: Most steel kegs used in American breweries are manufactured in Germany. The 25% tariff on finished steel products raises keg prices significantly

• Key Ingredients: Canadian barley and malt—essential for many craft beer recipes—are now subject to tariffs. Similarly, fruits like raspberries sourced from Mexico face increased costs

These tariffs come at a time when imports of beer and brewing materials are substantial. In 2024 alone, beer imports to the U.S. totaled $7.5 billion, with Mexico accounting for $6.3 billion of that figure. The ripple effects of these measures are being felt across the supply chain.

Economic Impact on Craft Brewers

The financial strain imposed by these tariffs is already apparent:

1. Rising Costs:

   • Breweries like Port City Brewing in Virginia report that their pilsner malt from Canada—essential to their recipes—is subject to a 25% tariff. Founder Bill Butcher estimates this could raise the price of a six-pack from $12.99 to $18.99

   • Monument City Brewing in Baltimore predicts similar price hikes for their beers due to increased costs for aluminum cans and imported barley

• Profit Margins Under Pressure:

  • Small breweries often operate with tight margins, leaving little room to absorb cost increases. Decisions such as passing costs onto consumers or cutting profitability are becoming unavoidable

  • Some brewers are stockpiling cans or switching packaging methods (e.g., painted cans instead of shrink-wrapped sleeves) to mitigate immediate impacts

• Export Challenges:

  • Canada, the largest foreign market for U.S. craft beer (accounting for 38% of exports), has retaliated with its own tariffs on American goods. Canadian consumers are boycotting U.S. beers, leading importers to cancel order.

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    An Instagram post by Pints and Panels about Tariffs and Alcohol (courtesy of Em Sauter, of Pints and Panels)

Pennsylvania’s Brewing Scene: A Case Study

Pennsylvania has one of the largest craft brewing industries in the U.S., with over 400 breweries contributing significantly to local economies and communities. The state’s brewers are uniquely vulnerable to these tariffs due to their reliance on imported materials.

1. Material Costs:

   • Breweries in Pennsylvania often use imported aluminum cans and Canadian malt, both subject to tariffs. These cost increases could force smaller brewers to raise prices or reduce offerings.

2. Competitive Pressure:

   • Larger breweries like Molson Coors, which source materials domestically, may weather the tariffs better than smaller operations reliant on international supply chain.  Pennsylvania’s independent brewers must innovate or risk losing market share.

• Community Impact:

  • With higher beer prices looming, consumers may opt for cheaper alternatives like hard seltzers or cocktails—a trend already encroaching on craft beer sales. This could hurt local breweries that rely heavily on loyal customer bases.

Broader Industry Challenges

The Liberation Day tariffs exacerbate existing issues within the craft beer sector:

• Changing Consumer Preferences: Millennials and Gen Z are drinking less beer overall, favoring hard seltzers and ready-to-drink cocktails instead

• Post-Pandemic Recovery: Many brewpubs are still struggling to rebound from COVID-19 closures and reduced foot traffic

• Market Saturation: The number of breweries in the U.S. has grown rapidly over the past decade, leading to fierce competition for shelf space and consumer attention

What Lies Ahead?

Craft brewers are exploring strategies to adapt:

• Localization: Emphasizing local ingredients and branding could help breweries differentiate themselves in a crowded market.

• Innovation: Experimenting with new packaging methods or alternative ingredients may mitigate some tariff-related costs.

• Advocacy: Industry groups like the Brewers Association are lobbying for clarity on tariff rules and potential exemptions for critical brewing materials

For Pennsylvania’s brewers—and craft beer makers nationwide—the coming months will be pivotal in determining whether they can weather this storm or whether these tariffs will fundamentally alter the industry.

Conclusion

Trump’s Liberation Day tariffs have introduced unprecedented challenges for America’s craft beer industry, threatening its affordability and accessibility while squeezing small businesses already operating on razor-thin margins. As brewers grapple with rising costs and shifting consumer dynamics, their resilience will be tested like never before.

For beer lovers across the country—and especially in Pennsylvania—the question remains: How much are we willing to pay for our favorite pint?

There is definitely a lot more to all of this, and it will be unfolding. The Brewer’s Association covered much of this here: Trump Administration Slapping 25% Tariffs on Canned Beer Imports and Empty Can Imports from Across the Globe.

From Perplexity

The “Liberation Day” tariffs announced by President Trump, which include a universal 10% tariff on all imports and additional targeted tariffs on specific goods and countries, are expected to have significant implications for the U.S. craft brewing industry, particularly in states like Pennsylvania.

Impact on Craft Brewing Industry

• Increased Material Costs:

  • The tariffs include a 25% levy on imported steel and aluminum, which are critical for the production of cans and kegs used by breweries. Many craft brewers rely on aluminum cans and steel kegs imported from countries like Germany, meaning these tariffs will raise production costs significantly

• • Breweries that source ingredients such as barley, malt, or fruits from countries subject to reciprocal tariffs (e.g., Mexico) will face higher expenses, further straining their budgets

• Market Challenges:

  • With rising costs, some breweries may reduce their product offerings or shift packaging strategies, such as moving away from aluminum cans altogether. This could limit consumer choices and hurt smaller breweries that lack the resources to adapt quickly

  • Export markets for U.S. beer may also shrink due to retaliatory tariffs from other nations, particularly Canada, which is a major importer of American craft beer. Losing access to this market could be devastating for breweries in Pennsylvania that rely on exports

• Consumer Sentiment:

  • Economic uncertainty stemming from these tariffs may lead to reduced consumer spending on discretionary items like craft beer. This is especially concerning as the industry is already facing challenges from shifting consumer preferences toward hard seltzers and cocktails.

Final Thoughts

The brewing industry is already in trouble, I don’t want to say ‘dire straits’, but it is getting there. Breweries are closing somewhat regularly (some recent examples: Butler Brew Works, IMBib, Bucket Brigade, Gateway, and Little Mutants). The ever growing costs of doing business, let alone a business with so many different and varying costs – such as restaurant costs, brewing costs, distribution costs, etc, etc, etc. The brewing business is also heavily regulated in all aspects, which also have costs. All of these are major factors. Add this to a declining market, and as we’ve been saying “the bubble has definitely burst” on the craft brewing industry. This almost feels like a death knell to many. And I think is why we saw an increase of closures in the past months, in anticipation of it all. With the next generation of drinkers not completely on board with the craft beer industry, the older and tiring out generation settling for hop water, non alcoholics, and other form of alcohols, the industry is certainly shrinking.

One hopes this won’t be a final nail, the coffin being closed. But unfortunately we can’t do anything but ride it out, and find out, and see what time shows us.

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