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Trump’s Trade Policies Deflate the American Beer Industry

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How President Trump’s Trade Policies Hurt the Beer Supply Chain in the United States

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By Megan Myscofski

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Lyle Benjamin is a wheat, barley and pulse crop farmer and the president of the Montana Grain Growers Association. He’s had to deal with more volatile markets since President Donald Trump took office, which has left his farm barely breaking even.

Tim Moore owns an equipment manufacturing company in Northern Colorado, which he said took a massive hit in the four-month window between when Trump’s steel tariffs went into effect and when he could adjust his prices for them.

Ryan Krill runs a brewery in Southern New Jersey that he said has lost enough money due to tariffs to threaten potential growth.

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Steel tanks at Cape May Brewing in New Jersey.

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You can’t tell the story of the U.S. economy under President Trump without his trade policy being front and center. As a presidential candidate, he promised to shrink the trade gap. It has widened by $6 billion since his inauguration and was at $52.5 billion as of this past September.

Farmers and small business owners have been on the front lines of the trade war, and the beer industry, which is full of farmers and small business owners, the damage is evident.

“You read a lot of stories about individual companies, importers, retailers, producers, who are hurt by tariffs, and the Trump administration ignores that,” said Simon Lester, an economist at the Cato Institute. ”It seems to think that the basic purpose of tariffs is to protect certain industries from foreign competition, and that will make them better off. It may be that somebody benefits, but there are a lot of people harmed along the way.”

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Barrels of beer at Cape May Brewing in New Jersey. 

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Three years into the Trump Presidency, unpredictability is the new normal, especially in trade negotiations. “We must as a nation be more unpredictable. We are totally predictable,” then-presidential candidate Donald J. Trump said in a speech laying out his foreign policy six months before the 2016 election.

While he sees it as a strategy, many in the small business and farming communities find that it leaves them in a precarious place where they are limited to short-term planning.

Trump has acted on that policy with trade partners across the globe, starting on his third day in office, when he withdrew the U.S. from the Trans-Pacific Partnership. He has since tried to transition the country away from NAFTA, which he called, “The single worst trade deal ever made by any country, anywhere in the world,” while campaigning for president. And then there’s China.

As these negotiations take and retake their turns in the news cycle, Lester said the administration’s goal is likely not to eventually scale them back. “It’s not like there’s a concerted effort to get rid of all of the tariffs. And, you know, and have a deal. It’s just, ‘Let’s not let this blow up anymore.’”

The stock market now bounces up and down with nearly every mention of tariffs, even just in President Trump’s tweets. When he makes threats, it goes up, and when another country retaliates, or negotiations start to wilt, it comes back down.

And the trade war with China alone has already cost the U.S. 300,000 jobs, according to Moody’s Analytics. That number could grow to 450,000 by the end of this year. Those harmed include many of the people President Trump claimed he would help: farmers, small business owners and consumers.

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Silos at Lyle Benjamin’s farm in Sunburst, Montana. 

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Yet American farmers aren’t doing better. The American Farm Bureau Association said 40% of U.S. farm income this year will come from trade aid, disaster assistance, subsidies and insurance payments. Farm debt is at a record high, and bankruptcies have gone up 24% since last year.

“Is it going to compensate farmers completely? Not even close,” said Anton Bekkerman, a professor of Agricultural Economics at Montana State University. “Even if you collect a whole bunch of tariff revenue, and you distribute it among the sectors that are getting impacted, you’re never going to compensate those sectors as much as the economic losses that they’re likely facing because of those trade disputes.”

Protectionist trade policies have also been better for big business than they have been for small business owners or the average American worker. Gary Hufbauer, an economist at the Peterson Institute for International Economics, said the tariffs have yet to help anyone beyond the top people at big companies whose products benefited directly from tariffs, like steel. “They may hire a few more workers, but we don’t see much change in the workforce with the tariffs.” He also said he hasn’t observed much change in wages for workers.

The biggest losers in that scenario, however, aren’t necessarily overseas, but rather the companies in the U.S. who make something with that steel and therefore pay the price increase. The smaller businesses in that category also don’t have the resources to minimize impact from tariffs by, for example, stockpiling before any go into effect.

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Cases of beer are loaded onto pallets at Cape May Brewing in New Jersey.

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Businesses often pass the extra costs from tariffs onto consumers, sometimes even when they know it will put them at a disadvantage. The typical American household has already paid $250 more for goods since the trade war started.

Some of that money comes from the steel used to brew beer and the aluminum used to can it.

“It turns out when you do the analysis,” said Hufbauer, “the losers lose more than the winners gain.”

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