President Trump has increased tariffs on steel and aluminum from 25 percent to 50 percent as of June 4. Trade Policy Analyst Jacob Jensen has examined the possible effects of these higher tariffs on the canned food industry, which relies heavily on steel and aluminum for packaging.
Jensen notes that similar tariffs during Trump’s first term did not succeed in reversing the decline in steel and tinplate production, a trend that has continued since 2018. He states, “As was the case during President Trump’s first term, these tariffs will likely have a minimal impact on reversing the downward trend in steel and tinplate production, which has declined significantly since 2018.”
Manufacturers may not feel the full effect of the tariff increase immediately because of existing supply contracts. However, many expect consumer prices to rise over the next year. According to Jensen, “While the full cost of tariffs may not be immediately felt due to manufacturers’ prior contracts, many producers anticipate higher consumer prices in the coming year, as they will be unable to fully absorb costs by cutting margins or negotiating with foreign producers.”
If the current tariff rate continues, it could make up as much as 12 percent of can manufacturers’ total costs. These added expenses are expected to be passed along to consumers. Jensen adds, “If the 50-percent tariff remains in place, tariffs may end up accounting for up to 12 percent of can manufacturers’ total costs, which will undoubtedly be passed along to U.S. consumers; canned food products may see an even higher price increase as these input costs ripple throughout the supply chain.”
The situation highlights ongoing concerns about how trade policy decisions affect downstream industries such as food manufacturing and ultimately impact American consumers.
