Steel tariff loophole triggers layoffs at last U.S. keg maker

American Keg Co. photo

The last U.S. manufacturer of steel beer kegs, located in Pottstown, Pa. (pop. 22,377), has laid off one-third of its workers because of President Trump's new tariffs on steel and aluminum, Lizzie O'Leary reports for Marketplace.

The main problem, according to American Keg Co. CEO Paul Czachor, is that the tariffs only cover raw materials and not finished products. That means imported kegs cost about $95 and domestic kegs about $115. The company has a loyal customer base that wants to buy American-made products, even if they're more expensive, but "they're only going to go so far as that price difference continues to rise," he told O'Leary. That will likely happen as domestic steel companies raise prices, secure in the knowledge that they're undercutting the artificially inflated costs of foreign steel. The tariffs will not take effect until March 23, but the price of domestic steel jumped 4 percent on March 8, the day Trump signed the orders, and continues to rise as American steel makers anticipate the effects of the tariffs.

"I think when the tariffs came out, it was probably a good idea," Czachor told O'Leary. "I'm sure the steel industry needs some protection but there are some unintended consequences for companies such as us that have competition that make imports." If Czachor could talk to Trump, he says, he would encourage steel tariffs that include finished products.