Small breweries hoping to open or expand in the next few months say they’re holding off on orders of new equipment as they wait to find out whether the administration’s latest round of proposed tariffs on $300 billion of goods -- including brewery machinery -- will go into effect.
“We are being more cautious and taking a conservative approach,” said Dan Coronado, who’s planning to open nanobrewery Lokahi Brewing in Kailua, Hawaii, with a partner next spring.
The sector may not have to wait long for clarity. President Donald Trump will sit down with Chinese President Xi Jinping on the sidelines of the Group of 20 summit in Japan on Saturday, where it’s possible they’ll hash out a deal -- or at least make enough progress that the U.S. will delay the potential fourth round of tariffs. But tensions are high leading into the meeting, with Xi taking a not-so-subtle swipe at Trump’s policy slogan, “America first,” in remarks to African leaders.
If the tariffs do go into effect, higher equipment costs could make it difficult for new players to enter the industry, said Jeremy Gobien, the owner of Evolve Brewery Outfitters, a brewing equipment manufacturer that imports its parts from China.
“Customers are holding off right now” because they want to see if the tariffs take hold, Gobien said. “The administration being so unpredictable makes it really difficult to make long-term financial decisions.”
Adrian Sawczuk, a Myrtle Beach, South Carolina, veteran who plans to open Tidal Creek Brewhouse with a partner next spring, is waiting to place an equipment order until the outlook on the proposed tariffs is more definitive. If he orders from China now, he risks a tariff charge of as much as 25% by the time the goods are manufactured and processed through customs.
U.S.-produced brewing equipment isn’t an option for him because it’s 50% to 100% more expensive after tariffs on steel and aluminum went into effect last year, he said. The levies have since been lifted on Canadian and Mexican metal.
The threat of new tariffs comes as growth in the craft beer industry is already slowing. So far, the number of new breweries this year has fallen slightly compared to 2017 and 2018, said Bob Pease, the president and CEO of the Brewers Association, which represents more than 5,000 breweries.
The dip is the result of an overcrowded market -- there are about 7,400 craft breweries in the U.S. -- and the fact that beer is facing declining demand as wine and spirits grow more popular. Steel and aluminum tariffs have added challenges, including the loss of 40,000 jobs between 2016 and 2018, according to a report by the Beer Institute and National Beer Wholesalers Association. Should the 25% tariff on brewing equipment go into effect, brewery owners would be squeezed even further.
Lokahi’s Coronado -- who hails from Detroit, sells construction supplies and says he understands the need to support American manufacturing -- had planned to order a 10-barrel system as he transitions beyond home-brewing. Instead, he opted for a five-barrel system in order to save money in case future equipment prices go up from the tariffs. He’s paid a deposit on the $200,000 order from an Oregon-based company that builds the machinery with parts sourced from China. He said the tariffs are coming on too fast to spend more right now.
“The tariffs are not coming at a walk, crawl, run pace,” Coronado said. “The dramatic increase will shock the growth of the brewing industry.”
3 Bbl Unitank Suppliers for Sale
Brew House System, Nano Brewery Brewhouse, Fermenters Tanks, Uni Tanks - Coff,https://www.coffbrewing.com/