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Beer and soda prices could surge over aluminum pricing scheme

Manufacturers are pushing back on the Midwest Premium pricing structure, saying it treats domestic manufacturers the same as international when it comes to cost and tariffs. ©Image Credit: Unsplash / Emmanuel Edward

If you think your beer and soda are more expensive than usual, you aren't wrong, and they could still be on the rise. The Midwest Premium is a pricing structure that has triggered higher prices for the cans that the U.S. beverage industry uses.

A rare bipartisan issue

The Midwest Premium is a regional pricing structure that is different from the global base price. It also includes the 50% tariffs on aluminum under Section 232, put in place by the Trump administration.

The pricing structure applies to all aluminum, no matter where it is sourced. According to manufacturers, that means even domestic manufacturers pay the premium and the tariff costs.

It has now sparked bipartisan action, with the U.S. House of Representatives penning a letter to Department of Commerce Secretary Howard Lutnick.

he letter, signed by 42 Republicans and 16 Democrats, asks for an investigation into "pricing irregularities in the sale of domestic aluminum."

Representatives say even recycled aluminum is targeted

According to the representatives, it's not just new cans being targeted—domestically recycled aluminum is getting hit, too. The bipartisan letter states that the Midwest Premium is "unnecessarily inflating prices."

“This not only creates price constraints for U.S. manufacturers in need of aluminum, but it ignores domestic producers over importers — ultimately undermining the president’s goals of reindustrialization and manufacturing growth,” the letter says.

“Meanwhile, aluminum users and American consumers continue to face the unnecessarily inflated price,” reads the letter.

The word premium doesn't translate to a surcharge

Many people hear the word "premium" and see it as a surcharge, but S&P Global Platts describes it as "simply a term for the regional price of aluminum" noting it isn't an added surcharge.

An ongoing battle

Only time will tell if the bipartisan letter sparks an investigation and change, but in the meantime, don't be surprised if you're paying more for drinks in aluminum cans.

Source: Food Dive

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