American Keg CEO Paul Czachor is looking for a level playing field when it comes to the imported steel and aluminum tariffs executive order signed by President Donald Trump March 8.
American Keg is
the only company in the U.S. that makes beer kegs using only U.S. stainless steel. The company is starting to experience higher production costs and lower sales as a result of the tariffs.
Czachor said that while he recognizes the value of the tariffs for the U.S. steel industry, there is still work to be done.
“You have to take a holistic view on the tariffs.
There are unintended consequences with these tariffs,” Czachor said.
What are those unintended consequences?
The steel tariffs apply only to raw materials being imported into the U.S. The tariffs do not apply to finished products — like beer kegs imported from Germany or China.
“The price of an import keg is not going to change — it’s going to use the same low cost steel and there is a zero dollar tariff on import kegs,” he said.
In addition, Czachor said that U.S. steel prices have already started going up as a result of the tariffs — up 20 percent since the fourth quarter of 2017.
“Our raw materials are going up, therefore driving the price of an American made keg up, while the import kegs are still the same,” he said.
Czachor added that a completed imported keg costs the same as just the raw materials for keg made by American Keg.
“Then we have to add in rent, labor, energy costs,” he added.
The way to level the playing field, he said, is to impose tariffs on imported, finished, steel kegs.
Czachor said before prices started going up on U.S. stainless steel, a stainless steel keg made by American Keg was about $10 to $12 more than an imported keg. Now, that cost difference is about $20.
Czachor said as the tariffs are implemented, he expects to see that price difference increase.
The increasing prices in raw materials and the need for American Keg to increase its prices have resulted in a loss of business for the Pottstown-based company.
“Any time you have an industry using high component of steel in its products, and you have an import competitor that will still use low cost steel coming in, it’s going to be an issue,” Czachor said. “Ideally the administration would do a holistic view and say — ‘how do we address this for industries like this.’”
In addition, the company was recently forced to lay off 10 employees —
one-third of its workforce — because of the business lost due to increasing prices.
“Customers were always willing to pay a little bit more for an American keg, but now it’s starting to get too high,” he said. “Now we are starting to lose business — as we raise prices.”
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Originally Posted by Zippyjuan
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