CHICO, the United States, Oct. 6 (Xinhua) -- Located in Chico, California, Sierra Nevada Brewing Company represents a typical American success story. Founded in 1980, the brand has grown from a small garage operation into one of the largest independent craft breweries in the world, with an estimated annual revenue of between 300 to 400 million U.S. dollars last year.

As a symbol of the U.S. craft beer revolution, Sierra Nevada continues to hold a leading position in an industry that contributed 77.1 billion dollars to the national economy in 2024, according to the Brewers Association (BA), a U.S. trade group devoted to promoting craft beer and homebrewing with over 5,400 members.

However, industry insiders said the once-booming sector has faced growing challenges in recent years due to the impacts of COVID-19, inflation and fierce competition. A persistent and worsening issue, they said, lies in the tariff policies adopted by the administration of U.S. President Donald Trump, which have put pressure on what was once a classic American success story.

HIGHER COSTS

When Xinhua visited the brewery on Thursday, the BA's official website had just posted a belated notice that the U.S. Court of Appeals for the Federal Circuit ruled on Aug. 29 that tariffs imposed under the International Emergency Economic Powers Act exceeded presidential authority and were issued illegally.

However, the ruling brought little relief to brewers, as the current tariff rates affecting craft beer companies will remain in place until at least mid-October, when the Supreme Court is expected to hear the case and make a final decision on the legality of Trump's so-called "Liberation Day" tariffs.

The tariffs have pushed up costs of aluminum cans, stainless steel kegs, imported hops from Europe, Australia and New Zealand, as well as brewing ingredients such as specialty sugars from Brazil. Moreover, trade tensions between Washington and its partners since early this year have hurt the industry's export market.

Beer in aluminum cans accounted for approximately 75 percent of craft breweries' packaged volume and revenue, according to data from the BA. Many taprooms also sell aluminum 32-ounce "crowlers" for beer-to-go. In 2018, during his first term, Trump imposed a 10 percent tariff on aluminum imports -- the first blow to the sector.

The impact on can prices has persisted through the Biden administration, while new tariffs this year have added further strain. The Trump administration raised the tariff on imported aluminum to 25 percent on Feb. 10 and to 50 percent on June 4. During this period, imported empty cans were also hit with a 25 percent tariff. In mid-August, the U.S. Commerce Department clarified that the 50 percent tariff also covered aluminum lids and ends.

Since most craft beer is sold in aluminum cans, higher aluminum prices directly translate into more expensive cans and ultimately beer. A common surcharge in U.S. aluminum pricing has also risen, pushing up can-sheet costs even further.

"Aluminum remains the single largest input cost for most breweries' packaging operations," warned the association in a blog in August.

Similar increases have hit steel, with tariffs jumping to 25 percent and now 50 percent. Beyond metals, Trump's trade measures have also targeted brewing ingredients that craft breweries use to innovate and create new flavors and aromas.

DOWNWARD TREND

In 2024, small brewers in the United States produced 23.1 million barrels, down 3.9 percent from the previous year. In the first half of 2025, production fell by about 5 percent more, according to the association's 2025 Midyear Report. Brewery closings continue to outpace openings in June 2025, down 1 percent to 9,269 breweries from 9,352 a year earlier.

Last year also marked the fourth consecutive year with reduced brewery openings. This downward trend, which began during Trump's first term, has reversed decades of expansion since the American craft beer boom that started in the 1970s with only about 100 breweries.

Large beer companies have begun warning investors of these effects. In August, Molson Coors, a major brewer headquartered in Chicago, Illinois, cut its outlook, citing added aluminum costs as one of the reasons. Smaller businesses, analysts said, have far less ability to adjust prices, absorb higher costs, or pass them on to customers.

Many brewers said they face tough choices on pricing and margins, with some seeking bankruptcy protection or closing their businesses entirely.

Overnight tariffs could add 60 million dollars, give or take a little bit, to the cost structure of small brewers in the United States, Bart Watson, president and CEO of the Brewers Association, told local media in March.

The global foothold U.S. craft beer gained over the past decades has also been shaken, as the industry has become an easy target for retaliatory tariffs, particularly from Canada, which accounts for roughly 38 percent of U.S. craft beer exports.

Trump's tariff policies have provoked retaliation in several Canadian provinces. Earlier this year, retailers canceled orders or pulled American craft brands from shelves in protest. Although the Canadian federal government lifted most of its 25 percent counter-tariffs on U.S. goods on Sept. 1, it retained measures tied to steel and aluminum.

Ontario, Canada's most populous province, announced that U.S. alcohol would remain off shelves at government-run liquor stores until a tariff deal or exemption is reached. Earlier in the year, several Canadian provinces removed U.S. products entirely.

Sierra Nevada has not announced any tariff-related price changes. Like many peers, the brewery is focusing on new products, including non-alcoholic options, and draft beer sales in bars to retain value without raising retail prices. The company, like much of the industry, is closely watching aluminum costs and the reopening of Canadian shelves to U.S. products.

The tariffs "can lead to tough decisions for small and independent craft brewers -- they may need to raise prices or scale back their variety of offerings, particularly in distribution. There are already lots of straws on the camel's back, and these are adding more," Watson told BA members in June, following the 50 percent tariff increases on aluminum and steel. ■