Why this U.S. beer keg company is worried about Trump’s tariffs

President Trump's promised tariffs on steel and aluminum imports have drawn mixed reaction from Washington, as well as American businesses. Hari Sreenivasan talks to Paul Czachor, CEO of the American Keg Company, the only domestic manufacturer of steel beer kegs in the country, about his company’s concerns that kegs made from low-cost steel from abroad will gain an even greater advantage.

President Trump's promised
tariffs on steel and aluminum imports have

drawn mixed reaction from political leaders,
including pushback from top congressional

Republicans.

American businesses are also divided.

Hari Sreenivasan spoke to one business owner
about how the tariffs might affect his company.

Paul Czachor is CEO of the
American Keg Company.

It's the only domestic manufacturer of steel
kegs in the country.

Thanks for joining us.

First, we hear the president is about to sign
off on these tariffs as early as tomorrow

perhaps.

Are you a fan of it?

Hari, thanks for having me on.

I would say that we are very concerned with
the tariffs.

I think, when we first started discussing
this, we were cautiously optimistic.

And now that's turned to a concern.

HARI SREENIVASAN: How come?

PAUL CZACHOR: Well, today, our domestic-made
kegs are priced higher than several imports,

mainly from China.

And if these tariffs go through, domestic
steel will continue to increase in price,

but all of the import kegs will still use
the low-cost steel from offshore, and those

prices will stay the same.

Therefore, the delta will be even higher to
purchase an American-made keg.

So, how do you live through that?

Do you end up absorbing the cost to try to
ride this out?

PAUL CZACHOR: I don't think we could live
through that.

I mean, the cost will be significant.

If steel goes up by $25 -- or 25 percent,
that's going to be a significant increase

to a stainless steel keg that's made domestically.

HARI SREENIVASAN: You know, the administration's
core reasoning for is that it's been unfair

for a long time, and we're just trying to
fix it.

Have you felt that kind of pressure when you
have been running this business?

PAUL CZACHOR: I think what the administration
is trying to do is fix a problem in the steel

and aluminum industry, and not to deep enough
-- I don't have a deep enough understanding

to tell you how I feel about that, but I'm
sure they're trying to fix a problem.

But the concern we have is for the downstream
products, such as stainless steel beer kegs.

That's not going to help any downstream products.

As I said earlier, those import kegs will
still come in using the low-cost steel.

HARI SREENIVASAN: So what I'm hearing is,
is if this is bad for your business, what

happens to your employees?

PAUL CZACHOR: Well, unfortunately, if it's
-- if it's the worst-case scenario that we're

looking at, we would be forced to shut down,
just because we couldn't compete using high-priced

domestic steel.

You know, the hope from the administration
is, you know, it's got to be a multistep process,

and, somehow, we have to address the downstream
products that are coming into this country

with low-cost steel.

I don't know how we can get that done, and
I don't know if it can happen quickly enough.

HARI SREENIVASAN: So, how -- I was going to
say, how do you do that?

I mean, that would mean all the different
products that are made with low-cost steel

that come in that we are consuming right now.

PAUL CZACHOR: We certainly will try to, you
know, petition for some tariffs on stainless

steel kegs.

But, again, there are several industries that
use steel for their domestic-made products.

And I don't know how the administration will
address the multiple industries that will

be impacted with this.

HARI SREENIVASAN: How many employees do you
have now?

PAUL CZACHOR: I have approximately 20 employees.

And, unfortunately, we had to let approximately
10 employees, so we're at -- let them go.

We were at 30 employees a couple of weeks
ago.

But we're already starting to see the steel
prices domestically go up, and we're starting

to lose some business already.

HARI SREENIVASAN: So, you know, for somebody
who doesn't understand this business, kind

of break that down for us.

How does the cost of steel going up into your
kegs impact your business so profoundly that

you have to start making cuts?

PAUL CZACHOR: Well, when we go out, our customers
-- we have approximately -- in the U.S., there's

approximately 7,000 craft brewers, wineries,
and cideries that will purchase those kegs.

And when we talk with our customers, they're
certainly willing to pay a small price -- or

a higher price for an American-made keg with
American steel, American workers, et cetera.

But that price, the delta, is continuing to
go higher and higher.

So, maybe at $5 a keg, a customer is willing
to do that to support American-made products.

But at $15 or $20, they're not willing to
do that.

HARI SREENIVASAN: Paul, what I'm hearing is
that these workers that you have are exactly

who the administration wants to save and want
to see their lives improve, but you're describing

a scenario where this is actually making it
worse.

PAUL CZACHOR: Yes.

And, you know, I believe the administration
wants to fix several items, but they're going

to have to certainly look at the downstream
products, as I mentioned earlier.

And I'm sure there's many industries similar
to us that use domestic steel where it's going

to increase, and not by a trivial amount,
but by a significant amount in the case of

stainless steel kegs.

HARI SREENIVASAN: How do you resolve this?

What do you hope happens?

PAUL CZACHOR: Well, I would hope that we'd
reconsider some of these tariffs, at least

delay them, or look at the holistic view of,
how do we fix some of the downstream issues?

HARI SREENIVASAN: All right, Paul Czachor,
CEO of the American Keg Company, thanks so

much.

PAUL CZACHOR: I appreciate it.

Thank you.