Bay Area brewer says tariffs already impacting beer business in multiple ways
On Monday evening, many will be hoisting a beer in celebration of St. Patrick's Day. But there's not a lot of celebrating in the craft beer industry these days, as President Trump's tariffs threaten brewers with higher prices that may be hard to pass on to consumers.
One local microbrewery feels caught in a global trade war. At Alameda Brewing, they should be thrilled with a holiday that centers around beer.
Instead, co-owner Vincent Phua feels like a pawn in a game of chess over tariffs.
"It definitely concerns us," Phua told CBS News Bay Area. "We're going to find out in about two to three months how much of it's going to be passed down to us. We're fully anticipating it. I think we are a little bit more vulnerable than, say, some of the bigger companies."
As a small company, Alameda Brewing will feel the pinch when they have to purchase higher-priced aluminum cans from Canada, but the real expense will come when the price of Canadian malted barley goes up.
"I'm afraid this will go up by about 20% in the next couple months," said Phua. "Some styles of beer, this could account for way more than...I think it could be 60 to 80% or even more of the cost of the beer itself."
The brewery opened in 2015 when the craft beer craze took off in the Bay Area. Since then, things have slowed a bit, but Phua thinks they will be one of the breweries left standing.
To do that means expanding, and that's another place where the tariffs have already kicked in. They need to buy more of the giant stainless steel fermenting tanks that each produce about 40 barrels of beer.
"These are the ones we bring in from China. So, we are going to anticipate tariffs on those. I think it's 20% more expensive right now," said Phua. "Yeah, it is a significant investment when it comes to capital expenditure."
But rather than put it off, Phua thinks it makes more sense to act quickly.
"The tariffs are already in place," he said. "But I'm anticipating that maybe the 20% could turn into 50%. Who knows? So, I'd rather make the purchase now before it's too late."
Head brewer Justin Green said that even more disturbing than the cost is the chaos.
"I mean, first it was 25%, then it was going to go to 50%, then it went down to 25 again, then it was going to go up to 200! Now it's back down to 20. So, we have no idea," said Green. "Unfortunately, I think all the brewers in the industry right now kind of feel the same way. We're going to have a plan in place but we're going to sit and wait."
But they're not giving up. It's a family business and Phua is committed to maintaining his father Bill's retirement dream of owning a brewery...tariffs or no tariffs.
"I'm living my dream now," said Bill. "Whatever comes, we'll deal with it. It's nothing that's going to stop us from manufacturing beer!"
The tariffs are meant to help American grain farmers, but they are currently exporting a significant portion of their malted barley to beer producers in Mexico.
The trade war is causing a lot of confusion and anxiety. And now you can't even have a beer to settle the nerves without worrying about what it's soon going to cost.