Why this U.S. beer keg company is worried about Trump’s tariffs
Judy Woodruff: President Trump's promised tariffs on steel and aluminum imports have drawn mixed reaction from political leaders, including pushback from top congressional Republicans.
American businesses are also divided.
Hari Sreenivasan spoke to one business owner about how the tariffs might affect his company.
Hari Sreenivasan: Paul Czachor is CEO of the American Keg Company. It's the only domestic manufacturer of steel kegs in the country.
Thanks for joining us.
First, we hear the president is about to sign off on these tariffs as early as tomorrow perhaps. Are you a fan of it?
Paul Czachor: Hari, thanks for having me on.
I would say that we are very concerned with the tariffs. I think, when we first started discussing this, we were cautiously optimistic. And now that's turned to a concern.
Hari Sreenivasan: How come?
Paul Czachor: Well, today, our domestic-made kegs are priced higher than several imports, mainly from China. And if these tariffs go through, domestic steel will continue to increase in price, but all of the import kegs will still use the low-cost steel from offshore, and those prices will stay the same.
Therefore, the delta will be even higher to purchase an American-made keg.
Hari Sreenivasan: So, how do you live through that? Do you end up absorbing the cost to try to ride this out?
Paul Czachor: I don't think we could live through that.
I mean, the cost will be significant. If steel goes up by $25 — or 25 percent, that's going to be a significant increase to a stainless steel keg that's made domestically.
Hari Sreenivasan: You know, the administration's core reasoning for is that it's been unfair for a long time, and we're just trying to fix it.
Have you felt that kind of pressure when you have been running this business?
Paul Czachor: I think what the administration is trying to do is fix a problem in the steel and aluminum industry, and not to deep enough — I don't have a deep enough understanding to tell you how I feel about that, but I'm sure they're trying to fix a problem.
But the concern we have is for the downstream products, such as stainless steel beer kegs. That's not going to help any downstream products. As I said earlier, those import kegs will still come in using the low-cost steel.
Hari Sreenivasan: So what I'm hearing is, is if this is bad for your business, what happens to your employees?
Paul Czachor: Well, unfortunately, if it's — if it's the worst-case scenario that we're looking at, we would be forced to shut down, just because we couldn't compete using high-priced domestic steel.
You know, the hope from the administration is, you know, it's got to be a multistep process, and, somehow, we have to address the downstream products that are coming into this country with low-cost steel.
I don't know how we can get that done, and I don't know if it can happen quickly enough.
Hari Sreenivasan: So, how — I was going to say, how do you do that?
I mean, that would mean all the different products that are made with low-cost steel that come in that we are consuming right now.
Paul Czachor: We certainly will try to, you know, petition for some tariffs on stainless steel kegs. But, again, there are several industries that use steel for their domestic-made products. And I don't know how the administration will address the multiple industries that will be impacted with this.
Hari Sreenivasan: How many employees do you have now?
Paul Czachor: I have approximately 20 employees.
And, unfortunately, we had to let approximately 10 employees, so we're at — let them go. We were at 30 employees a couple of weeks ago. But we're already starting to see the steel prices domestically go up, and we're starting to lose some business already.
Hari Sreenivasan: So, you know, for somebody who doesn't understand this business, kind of break that down for us. How does the cost of steel going up into your kegs impact your business so profoundly that you have to start making cuts?
Paul Czachor: Well, when we go out, our customers — we have approximately — in the U.S., there's approximately 7,000 craft brewers, wineries, and cideries that will purchase those kegs.
And when we talk with our customers, they're certainly willing to pay a small price — or a higher price for an American-made keg with American steel, American workers, et cetera. But that price, the delta, is continuing to go higher and higher.
So, maybe at $5 a keg, a customer is willing to do that to support American-made products. But at $15 or $20, they're not willing to do that.
Hari Sreenivasan: Paul, what I'm hearing is that these workers that you have are exactly who the administration wants to save and want to see their lives improve, but you're describing a scenario where this is actually making it worse.
Paul Czachor: Yes.
And, you know, I believe the administration wants to fix several items, but they're going to have to certainly look at the downstream products, as I mentioned earlier. And I'm sure there's many industries similar to us that use domestic steel where it's going to increase, and not by a trivial amount, but by a significant amount in the case of stainless steel kegs.
Hari Sreenivasan: How do you resolve this? What do you hope happens?
Paul Czachor: Well, I would hope that we'd reconsider some of these tariffs, at least delay them, or look at the holistic view of, how do we fix some of the downstream issues?
Hari Sreenivasan: All right, Paul Czachor, CEO of the American Keg Company, thanks so much.
Paul Czachor: I appreciate it. Thank you.