President Trump’s relationship with corporate America has hit a major speed bump.
With the administration’s new import duties on steel and aluminum, Trump has moved from tax-cutting hero to tariff-creating villain, pitting him against many of the nation’s largest companies.
Beverage makers, retailers and chemical and auto manufacturers are up in arms over levies that will raise the cost of making their products. Soft-drink makers could shell out an extra $500 million from higher aluminum prices, said Bloomberg Intelligence analyst Ken Shea. Brewers face additional costs of $348 million, according to an industry group.
That burden risks denting the benefits of the corporate tax overhaul, said Robert Budway, president of the Can Manufacturers Institute, a trade organization.
“Consumers and our industry’s workers and their families will ultimately pay the price of these punitive actions,” Budway said in a statement. “We do not want tariffs to offset the tremendous benefits the President’s tax and regulatory reforms brought to our industry and our 22,000 American workers.”
Many U.S. companies spent the past few months lauding the accomplishment of the White House in lowering corporate taxes. Big names including Walmart Inc., PepsiCo Inc., American Airlines Group Inc., AT&T Inc., Home Depot Inc. and Apple Inc. gave employees bonuses based on anticipated savings. Even companies that didn’t give bonuses, such as Coca-Cola Co., talked up the new tax code on corporate earnings calls.
The impact of the tariffs — 25 percent on foreign steel and 10 percent on aluminum — prompted BI’s Shea to trim his gross-profit-margin estimates for companies affected by the tax for the second half of 2018 and through 2019.
U.S. beverage companies were projected to see a gain of about 7 percent to net income due to the effective tax rate falling to 21 percent, Shea said. That same group will now probably see supplier prices increase by 1 cent per can, according to the can institute. Molson Coors Brewing Co. and Anheuser-Busch InBev NV have protested the tariffs since they were first proposed last week.
Mark Hunter, chief executive officer of Molson Coors, and John Hayes, CEO of packaging company Ball Corp., co-wrote an op-ed in the Denver Post on Thursday asking for an exemption on the aluminum used for beer cans. Hunter and Hayes said the tariffs are undermining the President’s promised economic agenda.
“In his first year in office, Trump has made it clear that one of his top priorities is to make our country more competitive with the rest of the world and create a better environment for job growth here in the United States,” they wrote. Not only will the tariffs hurt the companies’ ability to invest in new breweries in the U.S, “it’s likely going to cause job losses and increased prices, and that’s a losing proposition for everyone.”
DowDuPont Inc. sees the tariffs adding hundreds of millions of dollars to the cost of building new chemical plants along the U.S. Gulf Coast, said Jim Fitterling, …read more