After the U.S. Department of Commerce said on Wednesday it had determined that Chinese-made stainless steel beer kegs were being dumped in the United States, the Trump government imposed duties of up to nearly 80 percent on refillable beer kegs from China. Kegs made in Mexico and Germany are also affected to a lesser rate of 18.5 percent and 8.6 percent respectively.
In 2017, imports of refillable stainless steel kegs from China, Germany, and Mexico were valued at an estimated USD 18.1 million, USD 11.8 million, and USD 5.7 million, respectively.
The new levies on kegs stem from a trade complaint from the sole U.S. maker of kegs, Pennsylvania-based American Keg, which uses domestic steel in its manufacturing. The company itself was hardly hit when the Trump administration evoked a rarely-used national security clause last year to impose a 25 percent tariff on imported steel and aluminum. (inside.beer, 12.3.2018)
In its preliminary findings fact sheet, the Department of Commerce identified several suppliers of refillable stainless steel kegs which were presumably importing and selling their products in the United States “at less than fair value”.
“In the China investigation, Commerce assigned an affirmative preliminary dumping rate of 2.01 percent to mandatory respondent Ningbo Master International Trade Co., Ltd. and to Guangzhou Jingye Machinery Co., Ltd., Guangzhou Ulix Industrial & Trading Co.,Ltd., and Ningbo Haishu Direct Import And Export Trade Co., Ltd., that Commerce found to be eligible for a separate rate. Commerce assigned a preliminary dumping rate of 79.71 percent for all other Chinese producers and exporters,” the agency said.
“In the Germany investigation, Commerce assigned an affirmative preliminary dumping rate of 8.61 percent to sole mandatory respondent Blefa GmbH. Commerce assigned a preliminary dumping rate of 8.61 percent for all other German producers and exporters. In the Mexico investigation, Commerce assigned an affirmative preliminary dumping rate of 18.48 percent to sole mandatory respondent Thielmann Mexico S.A. de C.V. Commerce also assigned a preliminary dumping rate of 18.48 percent for all other Mexican producers and exporters.”
The anti-dumping rate is applied to refillable kegs, vessels, or containers with a nominal liquid volume capacity of 10 liters or more made from stainless steel, irrespective of whether they are assembled or not and whether they are filled or unfilled. This means in effect that also beer imported in kegs into the United States is affected by the duty. Not affected are large cans with a volume of five liters and one-way kegs made of stainless steel or plastic.
So far, the decision is preliminary. The U.S. Department of Commerce will announce its final determination with respect to Mexico on or about August 13, 2019, and with respect to China and Germany, on or about October 16, 2019. However, the U.S. Customs and Border Protection will begin collecting cash deposits from importers of beer kegs already before final determinations are made.
The new so-called affirmative preliminary dumping rate comes in addition to tariffs on Chinese products identified by the Office of the United States Trade Representative (USTR) last year as part of the U.S. response to China’s alleged unfair trade practices. The rate jumped to 25 percent this May from 10 percent last year.
"This tariff is going to be an added cost that breweries probably won't be able to absorb. It will have to be passed on to customers," said Paul Leone, executive director of the New York State BrewersAssociation in an interview with timesunion.
People close to the matter believe that even if American Keg was able to ramp up production, which will not be possible in the short to medium term, prices will be leveling off at a higher level. It is believed that one-way kegs that are already on an upswing will profit most from the new levies.
According to a study by Market Research Vision, North America accounted in 2018 for 25.75 percent of all metal and plastic keg sales worldwide. This was only about half of the sales in Europe (53.16%) but far more than what was sold in China (6.28%) and Japan (2.79%). Production of kegs is similarly spread with Europe accounting for 58.08 percent, North America for 14.82 percent and China for 14.06%. Major players are Blefa (Artemis Holding, 9.6%), Zhejiang Ningbo Major Draft Beer Equipment Co., Ltd. (8.0%) and Thielmann (7.7%).
“The strict enforcement of U.S. trade law is a primary focus of the Trump Administration. Since the beginning of the current Administration, Commerce has initiated 160 new antidumping and countervailing duty investigations,” the federal government wrote in a news release earlier in May. ”Commerce currently maintains 479 antidumping and countervailing duty orders which provide relief to American companies and industries impacted by unfair trade.”