President Donald Trump's across-the-board tariffs on imported aluminum and steel could have a major impact on the struggling San Diego craft brewing industry.
With more than 150 craft breweries, Chris Cramer, the co-founder of Karl Strauss Brewing Company, said San Diego is the undisputed craft brewing capital in the United States.
A 2021 report said craft beers added around $300 million to the local economy, but the 25% tariff could crush the industry.
“A lot of the little guys who don't have the resources and the experience that we have won't necessarily make it," he said. "And that's particularly concerning because craft breweries are such an integral part of San Diego's lifestyle now.”
Last year, more breweries closed than opened.
The tariffs would hit all aspects of the industry, from the steel used to brew the beers to the kegs used to store them to the cans to sell them.
"Any increased costs for brewing equipment, kegs or cans would add financial strain to small producers already navigating a competitive market," San Diego Brewers Guild executive director Erik Fowler said in a statement. "We recommend that our members contact suppliers directly to talk about any potential impacts."
Since the pandemic, breweries have relied more on cans for sales since customers have been slow to return to taprooms. But rising costs and changing drinking attitudes have sapped this lifeline.
More Americans are increasingly choosing hard seltzers over beer, and the price of aluminum has risen since the 2018 tariffs and global supply shortage.
And craft breweries already have a small profit margin.
“The margins have shrunk significantly," Cramer said. "And now what you're you're facing is that this one thing the craft brewers uniquely do, which is, you know, we put beer into cans.”
So far this year, aluminum cans account for about 75% of packaged craft beer’s volume and revenue, according to the Brewers Association, an industry trade group. Canada is the biggest source of aluminum for the United States, according to the federal government's International Trade Administration.
Three years ago, Colorado-based Ball Corp. increased its minimum orders for cans as well as pricing. Cramer said that leaves craft breweries having to rely on imported aluminum.
“It's reliable, it's good aluminum and the price is right," he said. "I think the craft brewers, like other businesses, they try and find the best product at the best price so that they can deliver for their customers. Ultimately these tariffs are all paid by customers.”
Customers like Depak Devasthali, who used to live in Carlsbad but is now visiting from Seattle, said they are willing to pay a little more to support local businesses.
“Certainly, we have to think about what makes the most sense (for our wallets)," he said. "But we understand the importance of local businesses, the lifeblood of the economy and, at the end of the day, we still support it.”
Cramer said there’s only so much customers would be willing to pay, leaving breweries to absorb the rest. And smaller breweries won’t be able to shoulder it.
