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On Friday the US government slammed Chinese and German stainless-steel keg makers with unfair-trade tariffs, saying that they dumped below-cost kegs into the US market making it difficult for American producers to compete…
In 3-0 vote at the US International Trade Commission threw a lifeline to American Keg, the only stainless-steel beer keg manufacturer in the US, which has been getting crushed by China and Germany’s low-cost imports.
In a probe conducted by the US Commerce Department, investigators found that the Chinese government had been subsidizing the state’s keg manufacturers, giving them an unfair competitive advantage over American Keg, the a 30-employee Pottstown, PA firm that had brought forth the complaint.
More than 15 Chinese companies failed to respond to the US trade probe, according to the Commerce Department.
Based on Friday’s action Chinese keg imports could face unfair-trade tariffs of 16% to 222%. German keg imports could face tariffs of 7.5%.
We are absolutely thrilled,” American Keg chief executive Paul Czachor told the Philadelphia Inquirer. “Great Day… American Keg will invest more, hire more, and produce more kegs.”
Trade case documents revealed that foreign keg manufacturers stockpiled 403,000 kegs in the United States earlier this year, ahead of the duties…almost double the 232,500 kegs available in 2018.
So what’s this all mean for the American beer industry?
Right now the US market is flooded with imported kegs, so the impact of the tariffs won’t be felt immediately. But assuming these tariffs go on for a prolonged period, kegs will get more expensive and those costs will be passed on to consumers in the form of pricier beer.
And it’s not like these tariffs will hurt big beer producers more than craft brewers. If these tariffs go on for an extended period they’ll hurt everyone.
(Buy American)
Mega-brewers like Anheuser-Busch use more Chinese and German imported kegs than craft brewers, but they produce much more beer.
But craft brewers rely on the cheaper imported kegs as well. And given the razor thin profit margins that many independent brewers live with…they’re bound to feel the impact of these tariffs sooner than bigger brewing conglomerates.
US trade laws are designed to protect industries. But in this case, the trade commission acted to protect but one company, American Keg, which is unusual.
And even though American Keg’s website proudly trumpets that it’s the ONLY manufacturer of stainless steel kegs in the US and has promised to “invest more, hire more, and produce more kegs” it’s basically a “mom and pop” operation that would struggle to keep up with a tidal wave of demand that would no doubt occur.
As always the free market would rule should these tariffs stay in place. It’s the American way and new US keg startups would arise to service the tariffs’ impact and challenge existing operations like American Keg. But probably not in time to keep production costs and beer prices from rising…prices that are sure to be passed on to consumers.
Friday’s ruling, though significant, isn’t the final word on the matter. Anheuser-Busch and the foreign keg manufacturers can appeal the commission’s decision to the US Court of International Trade.
“Since the Trump administration took office, the Commerce Department has initiated 168 new anti-dumping and countervailing duty investigations,” according to CNBC “more than twice the number for the comparable period in the previous administration.”
