Beer is always on the brain for brewery owners in Milwaukee, but now tariffs have joined the chat as well. That’s after President Trump imposed tariffs on aluminum and steel, and on imports from Canada, Mexico and China. The nations are Wisconsin’s three largest trading partners. Even though Trump set a 90-day pause on some of the tariffs, many industries here are already affected — including brewing.
President Trump says that persistent trade deficits have led to the hollowing out of American manufacturing. In response, he’s going all in on a trade war. On Monday, local brewers and other businesses reacted to the tariffs, during a roundtable discussion at Lakefront Brewery in Milwaukee. Reactions ranged from concern to perplexion. Ryan Bandy is chief business officer for Indeed Brewing Company in Walker’s Point.
“We always said beer’s usually recession proof, you know, because when it's good, you drink, and when it's bad, you drink,” says Bandy. “But it's like, I don't know, maybe yeah, we didn't really account for this type of thing, I guess.”
The roundtable to discuss Trump's recent escalation in the trade war was put together by Democratic U.S. Sen. Tammy Baldwin. Bandy explains that his brewery is in the middle of a property upgrade project. He says, already, two of the timelines for parts have doubled and prices are up 30%.
“We're halfway through this project, so there's other projects that we wish to do,” he says. “We started this project, you know, six, eight months ago, and now we're like, ‘Can we finish it?' Well, we kind of have to finish it because we already leveraged ourselves, you know. So, it's like... the chaos is real.”
Russ Klisch, owner of Lakefront Brewery, says it's been hit on multiple fronts. Lakefront's production is down about 4% because tariffs have stopped the brewery’s gluten-free sales to Canada. “And so we don't have those sales in anymore. So, like you say, it is chaos.”
At the same time, production costs have risen because of the higher price of importing cans from Canada. Klisch displayed a small, squishy ball with a world map pattern.
“I’d like to just to share here too that we got this from our aluminum can supplier here, and it said, ‘Do tariffs have you feeling stressed?’ And they sent us a stress ball. And so I thought that was kind of appropriate to have that. [The] Berlin Packaging actually went to that extreme to do it, but that's the way it is,” Klisch says.
Klisch adds that a company that supplies parts to the brewery sent a letter announcing that tariffs have driven up costs on its products, effective immediately. That company will pass the costs on to customers like Lakefront. Klisch says an increase in food costs is also likely to affect Lakefront’s restaurant operations, although he doesn’t yet know by how much. He’s especially concerned about the walleye that might be coming from Canada.
Andy Gale says uncertainty is the biggest challenge for brewers right now. Gale is co-founder and president of Third Space Brewing in the Menomonee Valley.
“We haven't seen any price increases directly yet, but we are bracing ourselves for them and with this seesaw back and forth of: ‘Will there be tariffs? Will they be paused? Will they be 10%? Will they be 25%? What will they be? Oh, they're paused again. No, they're back on.’”
He says it's incredibly challenging to run a small business when you cannot plan for what your prices are going to be, for the cost of your inputs, especially with tight margins.
Gale says Third Space Brewing wants to hire people, buy equipment and grow the business. “But it's hard for us to invest that cash into those types of things if we don't know if we need it down the line, when our costs go up,” he says.
Gale says if foreign sources get too expensive under tariffs, local breweries can decide to source products domestically. But he gives the example of aluminum cans. He says Third Space buys those domestically already, but they’re not immune from the trade war.
“We are concerned the price of those cans is going to go up anyway because our contract ties it to the London Metal Exchange index,” Gale says. “It's a global exchange, and more people will shift their demand to buying domestic cans as well, right? So that's going to increase the price of those cans. So no matter what, it's going to have a negative impact on our business.”
He adds that a lot of hops production has shifted out west to Yakima Valley, Washington and Oregon, but it will likely become much more expensive to provide specialty hops and therefore specialty brews from places like South America or South Africa.
Bandy says people have been going out less often since the start of the pandemic five years ago. And, coming out of the inflationary period we were just in, people have been spending less on things like beer and high-end food. He says many already think that $7 for a pint of beer is too much.
“And it's like, 'OK, now you can't go higher than that.' People have already said that about taprooms and craft beer and really nice restaurants,” Bandy says. “You're like, ‘This is really expensive.’ It's like, well, it should be double if we're to actually try to cover our costs. But you can’t. So, how do you do that?”
Baldwin points out that a few weeks back, the Senate took up a measure that would have done away with the tariffs between the United States of America and Canada. "And it got a majority of votes, meaning we had enough Republicans joined with every single Democrat to pass that legislation," Baldwin says. "Now the speaker of the House could choose to take that up, and we could thereby eliminate our tariff war with Canada, one of, well, Wisconsin's number one trading partner ... that would create a lot of relief."
WUWM reached out to the office of Republican U.S. Sen. Ron Johnson to get his response to the roundtable discussion. He did not respond by our deadline. But Johnson previously told PBS Newshour that Wisconsin manufacturers “agree” with what President Trump is trying to accomplish with the tariffs. Yet he said they're bracing themselves to see what the fallout will be.
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