The 2025 Aluminum Tariff: Context and Policy Rationale
The United States will impose a 25% tariff on aluminum imports from Canada, its largest aluminum supplier, accounting for 38.8% of total U.S. imports in 2023 (Statista, 2024). This policy falls under Section 232 of the Trade Expansion Act of 1962, which authorizes tariffs to protect domestic industries deemed critical to national security.
This measure follows the 2018 aluminum tariffs, which initially imposed a 10% duty on imports. While Canada was later granted exemptions under the U.S.-Mexico-Canada Agreement (USMCA) in 2019, the new 2025 tariff reverses that exemption, placing substantial cost pressures on industries reliant on aluminum.
According to the Aluminum Association (2024), 60% of U.S. aluminum demand is met through imports, highlighting the challenge of substituting domestic production for foreign supply. As a result, the brewing sector, which depends heavily on aluminum cans, will likely experience higher production costs and margin compression.
Aluminum Pricing Mechanisms and Tariff Influence
The cost of aluminum cans is determined by two interdependent pricing components:
1. London Metal Exchange (LME) Price
The LME sets the global benchmark for primary aluminum pricing, which fluctuates based on supply-demand conditions, production levels, and macroeconomic trends.
2. Midwest Premium (MWP)
The MWP is a U.S. regional surcharge applied to aluminum delivered duty-paid to the Midwest. It accounts for transportation costs, regional supply constraints, and import duties.
Tariffs directly influence the MWP, as seen in 2018, when the 10% tariff led to an 11.8% increase in the MWP (American Action Forum, 2019). This increase was not limited to primary aluminum but also affected recycled aluminum, which comprises over 70% of the aluminum used for cans (Beer Institute, 2023).
Currently, the MWP has already seen significant increases over the past 6 months as demonstrated in the chart below.
Projected Cost Impact on Craft Breweries
The implications for craft breweries are substantial, particularly for smaller producers with limited purchasing power.
- In 2018, the 10% tariff increased aluminum can prices by approximately 3%, or $0.005–$0.01 per can
- In 2025, with a 25% tariff, costs are projected to increase by 5%–10%, equating to $0.01–$0.025 per can.
Our Commitment to the Craft Beverage Community
At Core Cans, we're actively working to minimize the impact of tariffs by:
- Establishing alternative supply options
- Advocating for fair pricing with our partners
- Not requiring dunnage deposits
- Reducing shipping costs by aggressively negotiating rates and consolidating shipments with regional breweries
- Maintaining extreme vigilance in operational efficiency to pass our cost savings on to you
