The craft beer industry in America is grappling with more than its fair share of challenges. Competitive beverages such as hard seltzers and cocktails are cutting into beer sales, while the drinking habits of younger generations like Millennials and Gen Z are notably less than those of their predecessors. On top of these difficulties, brewpubs are still struggling to regain footing after the dramatic impacts of the COVID-19 pandemic five years ago.
Recently, a new concern has emerged for these brewers: the tariffs on imported goods implemented by President Donald Trump, which include a 25% tariff on steel and aluminum, as well as levies on products from Canada and Mexico.
“It’s going to cost the industry a substantial amount of money,” says Matt Cole, brewmaster at Fat Head’s Brewery in Ohio. He notes that the ongoing trade war could be severely damaging to their industry if prolonged. According to Bart Watson, president and CEO of the Brewers Association, these tariffs could have significant repercussions on various components of beer production.
Aluminum cans are among the items affected by Trump’s policies. Steel kegs — predominantly sourced from Germany — will become costlier due to tariffs on finished steel goods. Furthermore, tariffs on Canadian products such as barley and malt are expected to elevate costs. Many brewers, including those who rely on fruit imports like raspberries from Mexico, are concerned about the impact on their operations.
At Port City Brewing in Alexandria, Virginia, the founder Bill Butcher is contemplating a potential price increase for a six-pack of their popular Optimal Wit, which may jump from around $12.99 to $18.99. This increase raises questions about consumer willingness to pay higher prices, which could potentially slow down business.
Particularly worrying for Port City is the impending tariff on Canadian imports. Roughly every three weeks, the brewery stocks its 55,000-pound silo with a truckload of pilsner malt from Canada, which Butcher claims is unparalleled in quality elsewhere. Additional complications arise from the aluminum tariff, encouraging large brewers to shift from cans to bottles, thereby affecting bottle availability for Port City.
Fat Head’s Brewery faces its own set of challenges. With barley imports from Canada being impacted, they may need to adjust their supply chain to domestic sources in Idaho and Montana, adding logistical complexities. The tariffs give unfair competitive leverage to domestic barley producers, enabling them to increase prices.
To navigate these tariffs, Fat Head’s is taking steps such as stockpiling 3 million beer cans, 30% of its annual requirement, from a U.S. supplier and opting for more cost-effective painted cans instead of those having shrink-wrapped sleeves.
In Arizona, brewers are already reducing or eliminating aluminum canned products to mitigate costs, according to Cale Aylsworth, director at O.H.S.O. Brewery and Distillery and president of the Arizona Craft Brewers Guild. The Canadian market, which constitutes a significant portion of U.S. craft beer exports, now shows signs of backlash against the tariffs, with imports being canceled and U.S. beers being withdrawn from shelves.
The brewing industry faces this financial squeeze while contending with broader market challenges. Once experiencing vibrant growth, the number of U.S. breweries significantly expanded to over 9,700 from 2014 to 2024. However, the industry is now navigating a saturated market amid increased competition from seltzers and efforts to attract younger drinkers. This struggle is further evidenced by a decline in craft beer production in 2024, according to Watson.
Port City saw its production peak in 2019 before the COVID pandemic stifled the draft beer business in various establishments. Although slowly recovering, with a forecast of 13,000 barrels this year, the brewery’s path forward is hindered by potential ingredient and packaging cost hikes.
Butcher emphasizes the challenges of sustaining a small business amidst a disrupted supply chain. The unpredictable nature of tariff implementations exacerbates planning difficulties, increasingly injecting chaos into the business outlook. Smaller brewers must navigate these waters with limited resources compared to larger competitors, compounding their operational challenges.
Amid this uncertainty, brewers are staunchly guarding against price hikes to retain customers, as Aylsworth highlights the importance of maintaining beer as an affordable luxury in a fickle economy. Cole concurs, noting the consumer tendency to spend less, reinforcing the need for brewers to ensure beer remains an accessible indulgence.