Has inflation got you down when you go grocery shopping? Well, get ready for even higher food prices, at least for your canned goods. That will be one of several inevitable negative effects of the coming tariffs on tinplate steel.
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Ohio-based steelmaker Cleveland-Cliffs Inc. and the United Steelworkers union joined forces in January to file petitions for anti-dumping duties against eight countries, and countervailing duties against China, for allegedly selling tinplate steel (also called tin mill steel, a thin steel sheet coated in tin used primarily in cans for food packaging) in the U.S. at below-market prices, and in China’s case for the government subsidizing production. (Unusually, that’s a small piece of this puzzle; unlike so many areas of manufacturing, in tinplate, China is a smaller player, accounting in for only a little over 10% of the total imports from the eight countries named in this action.) The potential tariffs could be as high as 300%.
“Foreign dumping of tin products into the U.S. market has already forced significant layoffs at U.S. facilities; failure to curtail it will ultimately choke out domestic production, leaving can manufacturers beholden to foreign producers and their prices,” said USW international vice president Dave McCall. “Duties on tin mill products are essential to stabilizing the our market, restoring fair prices, and protecting good, union jobs.”
It’s certainly not a stretch to believe that China might be up to no good in the tinplate trade, given that country’s overall track record as a trading partner. But the other seven countries are Canada, Germany, the Netherlands, the United Kingdom, Korea, Taiwan and Turkey. That all those nations are colluding to undermine American steelmakers is just a bit tougher to sell, with the group including some of America’s staunchest allies and strongest trading partners.
"All tariffs are ultimately about making the rest of the country pay for favors dispensed by the Federal government to a more narrow sectoral interest,” said Samuel Gregg, distinguished fellow in political economy and senior research faculty at the American Institute For Economic Research, whose recent book, The Next American Economy: Nation, State, and Markets in an Uncertain World, made a strong case against tariffs and protectionism. “This particular case fits that bill exactly.”
“The tariffs will hurt can makers and end users,” said Thomas Madrecki, vice president of supply chain at Consumer Brands Association, an industry advocacy for U.S. CPG businesses. “They’ll make can making and food manufacturing less competitive in the U.S., and significantly reduce consumer buying power. This is not the time to be considering such petitions.”
But that viewpoint doesn’t matter. Once put into motion, such petitions follow a definitive investigative course through the Commerce Department and the U.S. International Trade Commission—one that, by design, is not allowed to consider the effects on downstream users or consumers. “These allegations go through a specific process that’s been shaped by years of lobbying,” said Madrecki. “The AC/CVD laws statutorily prohibit considering the impact on consumers.”
Predictably, then, the petitions have advanced steadily this year through several rounds of determinations by the two government bodies, with the next being the preliminary determination by the Commerce Department on the antidumping duties against the eight countries, expected today. “Commerce will be setting tariff levels that go into effect on this preliminary basis, before the final investigation wraps up early next year,” Madrecki said. “That means cost increases will soon hit supply chains and U.S. manufacturers–not to mention consumers.” With domestic producers not even making some of the types of tinplate required by can manufacturers, and with the generally thin margins across the canned food industry, the tariffs likely to be imposed by today’s decision will inevitably be passed on to consumers.
While the investigation by statute must ignore the effects on downstream players, though, reality won’t. “We’re a significant company in our area,” said Woody Swink, co-president of McCall Farms, a South Carolina food canning company. “We’re not a big CPG, we’re a family-owned business. But this will hurt our business, and it could be devastating to our growers and to other manufacturers who supply us. We estimate that our costs could go up by as much as 30%.”
That means consumer costs could rise by the same amount. Ironically, that could also hurt the U.S. government. “We have a good partnership with the U.S. Department of Agriculture,” said Swink. “They supply our product to food banks to feed hungry people. This would be really unfortunate.”
“In essence, it’s the government taxing itself,” added Madrecki.
But in the longer term, higher prices for domestic production also very likely mean more imports and less made-in-America food. “We’re already seeing an increase in imports of food from China because of the existing tariffs,” Madrecki said. A study commissioned by the CBA estimates that as many as 40,000 American jobs will be put at risk to protect 66 jobs in U.S. steelmaking. Information released by senator Joe Manchin (D, WV), who supports the tariffs, cited the entire workforce of about 950 as at risk at the Cleveland-Cliffs facility in Weirton, West Virginia, where the company produces its tinplate.
"Steel tariffs will have the same effects as all other tariffs,” said Gregg. “They will drive up the costs incurred by American companies that use steel. Based on past cases, that will result in job losses in the many more companies that are steel-using industries than in the steel industry itself. That's what happened during the Bush and Trump administrations and that is what will happen should the petitioners advance their sectoral interests by getting what amounts to yet another privilege from the Federal government."
Cleveland-Cliffs did not respond to a request for their input for this article. In a press release when the original petitions were filed, Lourenco Goncalves, Cleveland-Cliffs' chairman, president and chief executive officer stated, "The United States is still the largest importer of steel in the world, despite being the most environmentally friendly steel producing nation. As our filing shows, there has been a significant surge in unfairly priced tinplate imports flooding the United States over the past two years, and we cannot let this persist. We welcome competition with any and all imported steel as long as our U.S. trade laws are respected, and we will use all the tools at our disposal to remedy the situation.”
There are two other U.S. manufacturers of tinplate steel, U.S. Steel Corporation and Ohio Coatings company. Neither has taken a position on the petitions.
This article has been updated with a statement from the United Steelworkers.
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.
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"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.
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.
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 , 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."
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 , 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 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."
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 , 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.
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