AUSTIN, Texas -- The ongoing U.S.-China trade war is affecting the craft beer industry in Texas. While you might not put a whole lot of thought into the keg that holds your favorite beer, brewery owners sure do. They say the 25 percent tariff on imported steel is starting to hurt their bottom line because China is where the majority of kegs are made.
- Tariffs affecting keg prices
- Some businesses have switched to kegs produced in Europe
- Only one American company turns scrap steel into kegs
Austin BeerWorks co-owner Mike McGovern said there are regularly 4,000 kegs on hand in the brewery's warehouse. Up until recent tariffs were put on imported Chinese steel McGovern said he could buy a keg for $53.00 apiece.
"January 2019, prices shot up to uh, about $68 a keg," said McGovern.
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The 25 percent increase was so noticeable, McGovern had to switch from Chinese-made steel kegs to European ones.
Texas steel industry folks said they're taking a hit from the tariffs, too.
"Everybody's been affected," said Jim Shapiro with Austin Metal and Iron.
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Shapiro typically sells scrap steel to producers but said the tariffs have led to a surplus of steel lying around unused in the U.S. So, why with heaps of steel available is there only one American company that turns steel into kegs? Shapiro says it comes down to leniency in other countries.
"It's cheaper, labor costs are less, they're not as stringent on environmental laws," said Shapiro.
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Shapiro remembers the last time the steel industry suffered was in 2008 during the Great Recession. He said this is comparable, but he's hopeful for an upswing.
"I think we're at the bottom, so I do think it's going to get better," said Shapiro.
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That's encouraging to McGovern who said he'd rather focus on what's inside kegs, rather than what the kegs are made of.
The tariffs are affecting much more than just the steel industry. Cell phones, laptops and other technology products, shoes and hygiene products are just a couple out of the list of thousands of items. All of this is an attempt by President Donald Trump to encourage more U.S. made products, and to limit foreign products from flooding the market.