Tariffs drive up costs for Nashville craft brewery amidst industry challenges
- The newly applied 25% tariffs on aluminum and steel are significantly increasing costs for Nashville's TailGate Brewery.
- Supply chain disruptions and inflation have compounded economic difficulties for small breweries, which rely on both aluminum for packaging and steel in production.
- These tariffs pose a serious threat to the profitability and sustainability of craft breweries, as they may have to raise prices or risk eroding their margins.
In the United States, Nashville-based TailGate Brewery, a craft brewery, faces challenges stemming from newly applied 25% tariffs on aluminum and steel that were enacted by President Donald Trump. The tariffs have directly impacted small businesses in the brewing industry, with many brewers experiencing immediate price increases from suppliers. Wesley Keegan, the brewery owner, reports that every aspect of his operation costs more, forcing difficult decisions about passing these costs onto consumers. The brewing industry has faced several obstacles in recent years, including the COVID-19 pandemic, which significantly affected taproom sales, urging brewers to rely on to-go vessels such as cans and bottles. Additionally, global supply chain issues have resulted in shortages and price hikes of essential materials, compounding the economic strain on craft brewers. Keegan noted that there has been an ongoing increase in prices of industry inputs for the past five years, making it difficult for breweries to maintain profitability while absorbing these costs. The aluminum market, previously dominated by suppliers in Canada, has shifted for TailGate Brewery due to the tariffs and the pandemic. The company has diversified its aluminum sourcing to include suppliers from the US, China, and even Jordan. However, the ongoing consolidation within the aluminum industry complicates the situation further. Many major aluminum suppliers are now prioritizing larger brewing companies, leaving smaller operations like TailGate Brewery struggling to secure the necessary materials. Keegan observed that smaller brewers often find themselves neglected in favor of larger clients who can offer significant contracts. As local businesses, taprooms serve as community hubs where patrons discuss current events, including the implications of tariffs. TailGate Brewery operates in Tennessee, a state that largely supported Trump's policies. However, this political backing has not translated into ease for small businesses facing economic challenges brought about by changing regulations. The Brewers Association has expressed concern over these tariffs, arguing that they could severely impact brewers, erode profit margins, and ultimately affect local economies and consumer prices. In clear terms, the brewing industry's financial health is jeopardized by these tariffs alongside the multitude of pressures it faces in a rapidly changing market.