Apple Macs, Hershey's Kisses and Bud beer caught up in aluminium tariff plan

If the tariff includes finished goods, Apple's Mac and iPhone costs could go up, assuming the tax is a percentage of the metal components of Macs and iPhones.
If the tariff includes finished goods, Apple's Mac and iPhone costs could go up, assuming the tax is a percentage of the metal components of Macs and iPhones. PHOTO: REUTERS

LOS ANGELES (BLOOMBERG) - United States President Donald Trump says his proposed aluminium and steel tariffs are about putting America first, but they may affect all kinds of products people in the US consume or use daily - from Mac computers to Hershey's Kisses and Bud Light.

While the metal levies would hit the auto and aerospace industries hardest, they have ramifications for a wide range of businesses, including items consumers purchase significantly more frequently.

Beer, soft drinks, candy, canned soup and even pharmaceuticals rely on aluminium for cans, wrappers and blister packs, and many electronics include the metal.

Containers and packaging make up about 18 per cent of aluminium consumption in the US, according to Bloomberg Intelligence.

Higher costs would force the companies that make those products to cut jobs and increase prices for shoppers, according to Matthew Shay, chief executive officer of the National Retail Federation.

"When costs of raw materials like steel and aluminium are artificially driven up, all Americans ultimately foot the bill in the form of higher prices for everything from canned goods to automobiles," he said in a statement. "These tariffs threaten to destroy more US jobs than they will create."

Trump said on Thursday (March 1) that the US will impose tariffs of 25 per cent on imported steel and 10 per cent on aluminium for "a long period of time".

Molson Coors Brewing and Anheuser-Busch (AB) InBev, the largest brewers in the US, urged the Trump administration not to follow through with the proposal.

"About two million jobs depend on America's beer industry. We urge the Department of Commerce and US President Trump to consider the impact of trade restriction tariffs," Felipe Dutra, AB InBev's chief financial officer, said on a call with analysts.

There simply is not enough can sheet aluminium available in the US to satisfy demand, MillerCoors, the US division of Molson Coors, tweeted.

Demand for tinplate steel was 2.1 million tonnes in 2016, while domestic supply was only 1.2 million tonnes, according to the Can Manufacturers Institute, a trade organisation.

Trump said the tariffs are important for national security.

MillerCoors disagreed with that argument in another tweet: "The Department of Defence recently reported that aluminium does not cause any national security issues."

The widespread impact of Trump's tariffs has created enemies of the policy even within the Republican Party.

Representative Charlie Dent of Pennsylvania voiced particular concern for Hershey, which uses aluminium for packaging sweets such as its Kisses chocolates.

Hershey and Mars, which makes aluminium-wrapped Life Savers, did not immediately respond to requests for comment.

The details of Trump's plan are not yet clear, and how the tariffs are implemented will determine just how widely they affect American products.

Take Apple, which has many of its gadgets assembled in China, including phones with aluminium or steel edges.

If the levies apply only to raw materials, the effect on Apple would be minuscule, since the company produces only a small portion of its Macs in the US, according to Gene Munster of Loup Ventures.

If the tariff includes finished goods, Apple's Mac and iPhone costs could go up by as much as 0.2 per cent, assuming the tax is a percentage of the metal components of Macs and iPhones, Munster said. Apple declined to comment.

"I don't see much of an increase in costs," said Jun Zhang, an analyst at Rosenblatt Securities who follows Apple and other electronics companies. "It'll just increase the trade wars between the US and China, but there won't be much impact on the technology itself."