White House tariffs placed on Canadian steel, aluminum hitting Montana manufacturers

By Martin Kidston | Missoula Current

Tariffs imposed by President Donald Trump on steel and aluminum imports from Canada and other U.S. trade partners have increased the cost of products sourced by Montana manufacturers, though the full ramifications aren’t yet fully known.

A looming trade war with the country’s leading allies is likely to hit Montana manufacturers in the pocketbook, driving up the cost of products ranging from beer cans to machinery.

Taxes imposed on U.S. products in retaliation for the tariffs could also hurt the state’s plywood industry, among other goods, state officials said Friday.

“We import about $33 million in steel pipes and rods, and that’s almost exclusively from Canada,” said Emilie Ritter Saunders, communications director for the Montana Department of Commerce. “We know these tariffs are going to increase the price of metals that Montana companies source, which will no doubt increase the price of their finished products.”

Last month, Trump imposed a 25-percent tariff on steel and a 10-percent tariff on aluminum imported from the country’s top trading partners, including Canada, Europe and Mexico.

While the president billed the move as a step to preserve American steel and aluminum jobs, others feared it would impact downstream manufacturers by driving up the cost of both domestic and imported steel products.

In Montana, that includes steel purchased by Montana Resources in Butte to mine copper, or aluminum cans used by Missoula breweries to tap and distribute their beverage.

“We’ve seen a 10-percent increase in the cost of aluminum since the first of the year,” said Kevin Keeter, the purchasing manager at Big Sky Brewing in Missoula. “It adds to our cost of doing business. The impact could hit everything from machinery to cans, kegs and bottle caps. It’s across the board.”

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Keeter said the brewery’s supplier began getting nervous earlier this year as Trump considered the tariffs. Big Sky saw a modest price increase in the cost of cans in the first quarter, followed by a larger 6-percent increase in the second quarter.

Next week, Keeter expects to see another jump in costs when third-quarter prices are announced. The company’s can supplier is Crown, Cork and Seal.

“It’s 10 percent overall since the first of the year, and I expect to see another increase this quarter,” Keeter said. “It adds up. The cost of the container doesn’t dictate the cost of the beer, necessarily, but if the cost of one input is going up 10 or 15 percent, that money has to come from somewhere.”

A policy brief released in March by The Trade Partnership estimated that for every job gained by the tariffs in the steel and aluminum industry, 18 other jobs would be lost. The state-by-state report estimated that Montana would gain just 11 jobs in steel and aluminum while potentially risking 1,886 jobs in other sectors.

The report concluded that steel and aluminum tariffs and the associated retaliation by U.S. trade partners would echo through the nation’s economy, leading to an overall reduction in jobs. While none of the companies contacted by the Missoula Current for this story cited plans to cut employees, most indicated an increase in overall costs.

“When the cost of one input starts going up, we tend to see them all creep up,” said Keeter. “The tariffs have definitely caused the people we buy aluminum cans from to have a knee-jerk reaction, and that’s going to trickle down to everyone.”

But not all breweries have experienced an increase in aluminum costs just yet, including Philipsburg Brewing Company.

Nolan Smith, the company’s president, renewed his contract with Ball Corporation earlier this week and was surprised to see costs remain flat. However, prices could be adjusted with 30 days notice, he said.

“We were looking at maybe a penny a can, and we use a little more than half-a-million cans a year,” said Smith. “I think the bigger impacts the industry is going to see is the production of tanks and brewing equipment, things like that.”

Other companies that utilize steel, including Republic Services in Missoula, took action before the tariffs went into effect, staving off current price increases, at least for now.

How long that lasts will depend on factors beyond the company’s control.

“The additional expense was something our providers warned us about back in January,” said Glenda Bradshaw with Republic Services. “We preordered our entire steel needs for our containers in January before the price bump went into effect. It was like 300 percent, and it would have blown what we budgeted for steel. We wouldn’t have been able to purchase it at current prices.”

Last year alone, Montana exported more than $685 million in commodities to Canada, not including tourism, educational services or bulk agricultural products. That’s more than double Montana’s exports to its second largest trading partner in South Korea.

The state’s exports to Canada include $35 million in industrial machinery, $28 million in vehicle parts and $7 million in aircraft components, all of which require steel or aluminum, Saunders said.

“Those are all products that would be impacted by steel and aluminum tariffs,” she said. “Montana doesn’t produce a lot of steel, but the tariffs are going to influence the industries that source aluminum products.”

When Trump implemented the tariffs, Canada retaliated by imposing a 10-percent tax on a number of other goods, which are also manufactured in Montana. Those products include plywood and upholstered wood seats.

“Our exports to Canada make up more than one-third of the state’s total international exports,” said Saunders. “The impacts are yet to be fully realized, but Canada is a very important trading partner for Montana.”