From Tariff to Tap: How Aluminum Costs Reach Brewers

Aluminum prices in the United States are shaped by both the global price of the metal and the Midwest Premium, a benchmark used to establish the delivered price of primary aluminum in the U.S. market. Because the premium reflects U.S. market conditions, including tariffs on imported aluminum, it helps explain why tariff changes can affect brewers even when the cans they buy are made domestically.

Pricing generally starts with the global market price, usually based on the London Metal Exchange (LME). Buyers of primary aluminum in the United States also pay the Midwest Premium, which reflects U.S. market specifics, such as domestic transport and the cost of bringing aluminum into the country. Manufacturers then add the cost of turning aluminum into products such as can sheet and finished beverage cans.

The Midwest Premium is not a government fee or tax. It is a market benchmark based on transactions between aluminum buyers and sellers. Historically, the premium reflected costs such as freight, warehousing, and regional supply and demand. Tariffs have made it a much larger part of U.S. aluminum prices. Because the benchmark is quoted on a delivered, duty-paid basis, tariffs on imported primary aluminum are reflected in the premium. While comparisons over time are imperfect, the Midwest Premium has grown from roughly 18% of the U.S. aluminum price at the beginning of the Trump Administration to about 41% today, with tariffs accounting for roughly 30% of the current delivered price.

The pricing structure has raised concerns among aluminum users. Unlike the LME price, which is established on a global commodities exchange, the Midwest Premium is an assessment published by S&P Global Platts, with no federal agency directly overseeing how the benchmark is set. For brewers, an opaque benchmark outside their control can have a significant effect on one of their largest packaging costs.

Section 232 tariffs on imported aluminum magnify those concerns because the United States does not produce enough primary aluminum to meet domestic demand. Imports, particularly from Canada, are needed to fill the gap. U.S. reliance on imported primary aluminum is not new. USGS data show that 1980 was the last year domestic primary aluminum production exceeded apparent U.S. consumption. Production fell below consumption in 1981, and the domestic primary aluminum industry has contracted substantially since then.

Tariffs raise the cost of the imported aluminum needed to supply the U.S. market, which in turn affects domestic pricing. If imported aluminum costs $1.00 before tariffs and a 50 percent tariff raises the effective cost to roughly $1.50, domestic suppliers no longer need to compete against $1.00 aluminum. They can price closer to the new U.S. market level. A domestic producer may never pay the tariff, but the tariff still changes the price at which aluminum trades.

The result is unusual. A tariff may apply only to imported metal, yet the Midwest Premium can spread the higher, tariff-included price across the broader U.S. market. Producers and suppliers can therefore capture a tariff-related price increase on metal for which no tariff was ever paid although some or all of that increase may also be absorbed by businesses upstream in the supply chain rather than passed through to the brewer. A brewer's higher packaging bill does not necessarily correspond to tariff revenue collected by the federal government.

Brewers are especially exposed to the effect. Most small breweries do not import aluminum or finished cans directly. They buy cans manufactured in the United States, often with significant recycled content. The Midwest Premium itself applies to primary aluminum, not to every pound of recycled metal. Primary and recycled aluminum markets are nevertheless closely connected. Scrap is often priced at a discount to the Midwest transaction price, which combines the LME price and Midwest Premium. When the primary aluminum benchmark rises, the reference price for recycled material can rise with it.

A brewer can therefore buy an American-made can containing American recycled aluminum and still face higher costs linked to tariffs on imported primary aluminum. The Midwest Premium is not necessarily applied dollar-for-dollar to the recycled content of a can, but a higher primary aluminum benchmark can influence the price of scrap, can sheet, and finished cans throughout the supply chain.

Small breweries have limited ability to avoid or absorb those increases. Aluminum cans account for nearly 80% of off-premises volume in 2025 and are the dominant packaging format for craft beer. Small breweries purchase far fewer cans than large multinational brewers; lower purchasing volume generally means less leverage to negotiate prices or absorb sudden increases. A pricing change far upstream in the aluminum market can quickly translate into a higher per-case packaging cost for a neighborhood brewery.

Recent movements in the Midwest Premium show how closely it responds to tariff policy. In 2026, the premium has at times approached or exceeded $1 per pound, far above historical levels. In August, it fell sharply following reports that the Administration might reduce tariffs on certain Canadian aluminum. Mining, smelting, and transportation costs had not suddenly changed. The market was reacting to the possibility of a lower tariff.

For brewers, the aluminum tariff issue therefore extends well beyond whether a brewery or can supplier directly imports a tariffed product. U.S. dependence on imported primary aluminum means tariffs can raise the benchmark price across the domestic market, with higher costs flowing through rolling mills, can manufacturers, distributors, and ultimately breweries.

While tariffs raise the cost of bringing primary aluminum into the United States, the Midwest Premium reflects the higher U.S. market price, and the primary aluminum benchmark can also influence recycled material and downstream products. Brewers can buy American-made cans, use highly recycled packaging, and still pay more because of tariffs on imported primary aluminum.

The Brewers Association will continue to engage with government officials, monitor trade developments and advocate for the removal of barriers impacting independent craft brewers.