Economy

Can Industry: Tariffs are a Tax on Tinplate

June 4, 2018

The U.S. packaging industry, which relies on imports of tinplate, is among the many concerned about the effects of President Trump’s tariffs on steel and aluminum imports.

The Can Manufacturers Institute estimates that 42 percent of tinplate steel needs to be imported to manufacture food cans for American consumers. More than 60 percent of primary aluminum needs to be imported from foreign sources to produce aluminum can sheet used to manufacture beverage cans. The tariffs stand to reduce the supply and raise the price of tinplate products in the U.S.

“U.S. can manufacturers depend on stable, fair and robust markets for steel and aluminum to manufacture the 119 billion food, beverage, aerosol and general line cans Americans use every day,” said CMI President Robert Budway in a March 8 release. “Tariffs on aluminum and steel will artificially distort pricing of these metals. Our initial calculations are the tariffs will increase the cost of the can by nearly 1 cent. This 1 cent average increase translates into $1.1 billion that our industry and consumers will unnecessarily pay to the U.S. government.”

Broadly speaking, the U.S. does not produce enough tinplate to meet domestic demand and relies upon imports, most recently from China, South Korea and Germany, explains Lisa Reisman, Executive Editor of MetalMiner. “Therefore, buying organizations can expect price increases for tinplate on the basis of longer lead times for cold rolled coil and a drop-off in imports beginning in May of this year,” she said.

Like most other steel products, tinplate prices have gotten support from the tariffs. “In general, buying organizations should have covered forward earlier this year before the Section 232 announcements,” she said. “If domestic mills continue to raise prices, even with a 25 percent import duty, imports will still provide some price relief. However, if tinplate prices remain high for a longer period of time, consumer packaged goods companies will begin to use alternative packaging materials, which will make a dent (pun intended) in demand and ultimately create downward price pressure. As we like to say, nothing kills high prices like high prices,” she added.

Reisman will be a featured speaker at Steel Market Update’s Steel Summit Conference Aug. 27-29 in Atlanta. For more information and to register, go to: www.SteelMarketUpdate.com/Events/Steel-Summit or call 772-932-7538.