Hard to swallow
Trump's tariffs may hit one of Colorado's most valuable resources – craft beer

Like everything else, beer has gotten more expensive in the past several years. So has the cost to produce it. Now Colorado’s craft brewers, businesses on which Colorado created a culture and a reputation, are girding for even higher costs. As President Donald Trump lobs tariffs at the United States’ largest trading partners, prices are poised to go up on everything from aluminum cans to grain.

Those higher costs are likely to be passed on to Colorado’s beer drinkers. That could be a further drag on an industry already struggling with declining sales.

“At some point, it just gets too expensive,” Dave Thibodeau, president and co-founder of Ska Brewing, said. “And I think we’re up against that threshold, or we will be with these tariffs.”

At Ska, they’re looking at discontinuing some beers because they don’t make economic sense anymore.

“Although they’re beers we love … they’re not actually making us any money now, and we don’t feel like we can really raise the prices too much more,” Thibodeau said.

Brewers will be hard-pressed to keep a lid on prices if all of Trump’s tariff proposals come to pass. After weeks of waffling, Trump on Tuesday imposed a 25% tariff on goods from Canada and Mexico, while also increasing tariffs on China. Separately, tariffs on steel and aluminum are slated to go into effect March 12.

Tariffs are simply a tax that businesses have to pay on goods and materials brought in from other countries. The administration’s stated goal is to get businesses to manufacture more of what they need in the United States, which would theoretically lead to more jobs. But many business owners contend it will mostly lead to higher prices for everybody. 

“Any kind of manufacturing business right now, it’s not going to help keep them in business. It’s only going to hurt,” Thibodeau said.  

What’s bad for brewers is bad for business in Colorado. The industry generates more than $2.4 billion in economic impact, including jobs and revenues, according to the Brewers Association. 

The administration’s broad tariffs would leave virtually no corner of the state’s craft brew business untouched.

At Diebolt Brewing Co., in Denver, there are all kinds of steel vats and widgets for boiling, fermenting and storing. Most of the equipment comes from overseas, according to owner Dan Diebolt. It could cost more because of tariffs, he said.

But he’s most worried about the things that go into the equipment – the building blocks of beer.

“The grain is a product that I would be more concerned (about) with tariffs because our grain comes from all over the world, and there’s no telling who is going to become the target of that … . Ingredients are probably 25% of our overall cost,” Diebolt said. “We have hundreds of supply points to actually make this brewery work and to try and know individually what’s being affected by this is really, really hard to do.”

For Ska’s Thibodeau, the aluminum tariffs are top of mind. About two-thirds of the company’s revenue comes from off-site sales at places like supermarkets and liquor stores. All that beer comes in aluminum cans.

“Aluminum is the scariest for us,” he said. “Cans are a lot cheaper than bottles … I feel like as far as looking at alternatives, like something other than an aluminum can, I don’t know that we can get anything less expensive, even after the tariffs,” Thibodeau said.

Most of Colorado’s craft brewers are reliant on aluminum cans to some extent, according to Casey LeFever, chief operating officer at Broomfield-based 4 Noses Brewing. Breweries have been contending with volatile aluminum prices for a while. Prices shot up during the pandemic when taprooms and bars shut down, and businesses needed another way to sell beer.

If tariffs persist, prices will probably shoot up again, LeFever said. Large corporations have ways to manage, but local craft brewers don’t, he said.

“Coca-Cola has said they have the flexibility to put more of their product in plastic if needed. We don’t have that ability. We can’t just buy a new plastic beer-bottling line,” LeFever said.

All of this comes at a difficult time for craft brewers. Alcohol sales are down everywhere because people are drinking less. In Colorado, a crowded market for brewers, 41 of the state’s roughly 400 breweries shut down last year, according to the Colorado Beverage Coalition.

“Across the industry, it’s just challenging times to begin with. So any rising cost is not good,” LeFever said.

The threat of tariffs – and uncertainty over how they could be implemented – is making it difficult to plan ahead, according to LeFever.

 “Our materials that we buy are going to see a random surge in cost. Well, we can’t even control that … so to have that looming makes it tough to forecast and that’s a key part of running a healthy business,” he said.

For more from Colorado Public Radio, go to: www.cpr.org.