Tariffs spell trouble for cans: ‘We can’t absorb those costs’

For years, the biggest expense for Pacific Coast Producers was the peaches, pears and tomatoes that the farmers in the co-op grew to be processed for sale in grocery stores as well as restaurants, hospitals and school cafeterias.

But since 2018, the biggest expense for the co-op isn’t the fruit: It’s the cans.

New tariffs are reigniting tensions over an object that is critical to the food and beverage industry but most consumers give little thought. Cans are likely to be more expensive after President Donald Trump’s move to double tariffs on imported steel, the main material used in cans for food, and on aluminum, commonly used for beverages.

Roughly 80% of the specialized tin-plated steel – steel with a thin layer of tin – used for cans for food comes from abroad. And while roughly 70% of the aluminum used in cans for beer, energy drinks and sodas comes from recycled material, the other 30% that is virgin, or new, aluminum is largely imported.

Pacific Coast Producers won’t feel that bite – yet. Like other manufacturers, it locked in critical elements of its supply chain well in advance. But if those tariffs remain in place, the co-op’s next order of tin-coated cans could cost it an additional $40 million.

“We can’t absorb those costs,” CEO Matt Strong said. The co-op, based in Lodi, California, sells its fruit under a variety of private-label brands and has annual revenue of $1.1 billion. Strong estimates he is likely to raise prices for retailers, like grocery stores, as much as 10 cents a can to cover the increased expense. Retailers, he said, could pass the cost on to consumers.

Steel manufacturers and the Trump administration argue that higher tariffs are necessary to protect the industries from “unfair foreign competition” and to spur investment in new and existing mills. But can manufacturers and food and beverage companies say the new tariffs will raise prices and make it more difficult for them to compete against foreign suppliers.

Previous tariffs didn’t encourage steel and aluminum manufacturers to expand U.S. production of the metal used to make cans. Instead, they reduced it.

In 2018, Trump put tariffs of 25% on steel and 10% on aluminum, with some exclusions. In the following years, steel producers shut down nine production lines making the specialized tin-plated steel across the country, leaving only three, according to the Can Manufacturers Institute.

On Wednesday, Nippon Steel completed its acquisition of U.S. Steel more than a year after the Japanese steelmaker first tried to buy its U.S. competitor. Under the agreement, the government will retain the right to appoint one independent director on U.S. Steel’s board. A majority of board members will be U.S. citizens.

U.S. Steel still produces tin plate, but it has scaled back its operations in recent years. Cleveland-Cliffs shut down a tin-plate plant in Weirton, West Virginia, in 2024, citing a decision by the International Trade Commission rejecting U.S. tariffs on foreign countries that exported tin-plated steel and other metals to the United States.

U.S. Steel and Cleveland-Cliffs did not respond to a request for comment.

In the past two decades, the number of aluminum smelters in the United States has dropped to four from 24, according to the Aluminum Association.

The high tariffs on imported aluminum won’t bring back primary aluminum production, the association said. Rather, the industry needs a change in energy policy to provide the vast amount of electricity that is needed to produce aluminum at a reasonable price, the association said.

The combination of the tariffs and the decline in tin-plated steel and aluminum production has sent prices soaring for cans made from metals in the past five years. The price of steel cans and tinware for manufacturers has jumped 67% since 2020; aluminum can prices have climbed 26% since then, according to the Bureau of Labor Statistics.

Higher tariffs on aluminum could push beverage manufacturers into alternative packaging as well. James Quincey, CEO of Coca-Cola, said this year that the beverage giant could pivot to more plastic packaging if aluminum prices surged.

Some craft beer brewers, an industry that has shifted much of its packaging to aluminum cans from bottles in recent years, are weighing their options under the new aluminum tariffs as well.

“We can easily switch. We have a high-speed bottle line,” said Fred Matt, president of Saranac Brewery in Utica, New York. But he said that decision would affect some retailers, which have adjusted their racks and shelving in warehouses and stores for cans.

Matt said Saranac would stick with cans for now, as he locked in his aluminum can prices for this year in fall 2024, before the new tariffs took effect. “We got lucky on that front,” he said. “You don’t always win that game.”

Port City Brewing Co. in Alexandria, Virginia, still puts most of its packaged beer in bottles, but company executives said they had to scramble a couple of months ago when their bottle supplier suddenly cut them off.

“A lot of the major brewers started shifting from cans into bottles. They didn’t want to pay the higher price on the aluminum tariffs,” said Bill Butcher, a founder of the small brewery, which orders about 50,000 bottles and 10,000 cans each month.

Butcher said he was nervous about how much more aluminum can prices could climb when he placed his next order in mid-July. “It will likely force us to raise our prices,” he said. “And I don’t know of anyone who wants to pay more for their beer, which means business could slow down.”

Rick Huether, president and CEO of Independent Can Co., a family-owned company in Maryland that makes custom tins for popcorn, holiday cookies and dog treats, said the uncertainty around Trump’s volatile stance on tariffs had resulted in chaos throughout the supply chain.

Last year, Huether said, he sold at a loss some excess tin-plated steel he had bought. This year, with prices soaring, he won’t order the specialized steel until he has committed contracts from customers.

But an even bigger worry for him is that if tin-plated steel prices remain high, his customers could start to seek out lower-priced packaging alternatives. “Popcorn doesn’t have to go into a can,” he said. “It can go into a plastic bucket or tub.”

Strong of Pacific Coast Producers said his company planned to stick with cans. Even with the price increase in recent years and the additional costs from the new tariffs, tin-plated steel cans remain the least expensive option for Pacific Coast, and its production lines are geared largely toward cans. Strong estimates that cans make up 30% of the co-op’s production costs, an increase from 15% in 2018.

While he understands the strategy behind the tariffs, he said, he hopes an exclusion can be carved out for the tin-plated steel used by the food industry. Without it, he worries that prices will continue to climb, affecting consumers who are increasingly feeling pinched at the grocery store.

Moreover, while the goal of the tariff policy is to protect the steel and aluminum industry, Strong said, it puts food manufacturers like his co-op at risk from less expensive canned fruit from overseas, including China.

“The collateral damage of these tariffs is significant,” he said. “We don’t have enough domestic production of tin-plated steel. We’re trying to save an industry that isn’t there.”

This article originally appeared in The New York Times.