After a challenging few years America’s Craft Brewers are nervously watching for signs of what a second Trump presidency will have in store for them.
As the dust settles from the recent United States election, industries across the country and planet are attempting to discern what the election of Donald Trump for a second term will have on their interests. As of the publishing of this story, Mr. Trump is assured a Republican Senate majority and quite possibly a Republican majority in the House of Representatives. That should allow him carte blanche to impose his vision for American business unimpeded.
The U.S. beer industry, and the craft brewing industry in particular, are watching these developments closely. Both have been buffeted by a series of challenges (import beer, tariffs, consumers drinking less) that have led to sales declines. According to the Brewers Association (BA), in 2023, U.S. beer production volume was down 5.1%, and craft beer production was down 1%. Those numbers mirrored the U.S. beer sales volume declines for 2023, too.
Uncertainty in the marketplace can lead to dire consequences for an industry built by and powered by small, independently owned breweries. In 2023, the sector grew to 9906 total breweries, a net increase of 72, and saw 405 operations shutter. That is a stark change from the pre-COVID times when the industry experienced massive growth.
According to the Brewers Association mid-year report, those issues continued in 2024, with craft beer sales down 2% year over year. One of the biggest concerns for the brewers surveyed was inflation and increased prices for goods, which were impacting sales.
One in particular is causing nervousness among brewers across the United States: Trump’s embrace of tariffs on imported goods. In his first term as president, Trump was a vocal critic of international trade deals. He pulled the U.S. out of several and imposed blanket tariffs on numerous items. When he imposed a 10% tariff on aluminum imports in 2018, the craft beer industry decried its effects on their industry, saying it led to price increases for consumers and a loss of 40,000 jobs, according to a study from the National Beer Wholesalers Association.
This issue was highlighted in a post-election day release from the BA to its members. It pointed out several potential problems for small and independent breweries. It warned breweries that Trump has been highly vocal about his support for increasing tariffs and possibly instituting new ones. This could have a severe impact on aluminum can pricing and brewing equipment, both of which rely heavily on imports from China, a country Trump has suggested in speeches he might hit with new tariffs as high as 60%.
The BA also warned its members of several tax-related issues under the upcoming Trump administration. The expiration of a 20% deduction set to expire in 2025 from pass-through entities such as sole proprietorships, partnerships, and S corps could impact breweries. Also discussed was the possible exemption of income taxes on tips, which could cause significant issues for front-of-house employees in tap rooms, restaurants, and bars. The BA warned that another tax could be put in place to replace the estimated $10-$25 billion in lost tax revenue for the government.
One final issue the BA identified is the high probability of finding cuts to federal agencies across the board. The Alcohol and Tobacco Tax and Trade Bureau, which oversees the U.S. beer industry, the USDA Agriculture Research Service, and other crucial agencies for brewing could be plunged into chaos if their funding is slashed. This could create numerous roadblocks to getting new beers and labels approved for mass production, the creation of new hops and grains for brewing, and a whole host of other issues.
None of these potential problems bode well for the beer industry. While the possibility of high tariffs on the red-hot Mexican beer market and overall import market could drive drinkers towards domestic brews and reverse sales declines, other issues could offset those gains. One thing is sure as we move forward. An already challenging marketplace for alcohol, especially beer, could become even more complicated.
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