What happens when a decades-long price guarantee meets a 50 percent tariff on its most important ingredient? For AriZona Iced Tea, it might mean the demise of its beloved 99‑cent tallboy the same price point maintained for over 30 years amid inflation, increasing labor costs, and commodity-price volatility.
The catalyst is President Donald Trump’s move to raise tariffs on imported steel and aluminum from 25 to 50 percent, starting June 4, 2025. The policy, implemented under Section 232 of the Trade Expansion Act of 1962, is couched as a national security requirement to support local metals production. But for beverage makers who use aluminum cans, the effect is direct and mechanical: increased costs of input that filter through the supply chain.
Aluminum can production is a precision-based, multi-step process. Sheet ingots are rolled thin into coils, lubricated, and drawn into cup shape before ironing them into tall, seamless cylinders. Ends are pressed in separately, frequently from marginally differing alloys, and the inside is lined with a polymer coating to resist corrosion. Each process uses energy and specialized alloys many of which are imported. Half of the U.S.’s aluminum is imported, and can‑grade sheet relies even more on foreign supply. AriZona imports approximately 20 percent of its aluminum from Canada, an old friend trade partner now under full tariff.
The economics are brutal. Industry analysis puts a 50 percent tariff at the potential to increase can prices up to 24 percent in one year, depending on contract cycles. For low-margin drink manufacturers, where packaging constitutes30–40 percent of total product cost, of goods that transition is disruptive. “At some point the consumer is going to have to pay the price,” founder Don Vultaggio said in an interview with The New York Times. I hate even the thought of it. It would be a hell of a shame after 30‑plus years.
The entire canned foods industry already is suffering. Maryland‑based Independent Can has raised its price twice this year, said CEO Rick Huether, adding that the company has “absorbed the amount of the tariffs that we can absorb.” The Can Manufacturers Institute estimates the tariffs could make up up to 12 percent of total manufacturing costs for U.S. can producers, forcing price hikes downstream. A 2018 tariff case study found that consumer prices for canned vegetables increased more steeply one year after tariffs began, capturing the time lag between contract renegotiations and retail prices.
Alternatives are available, however, each with trade-offs. Coca‑Cola CEO James Quincey has proposed increasing more products to plastic bottles to “compete in the affordability space.” However, plastic resins are linked to petroleum markets and are subject to their own price volatility. Glass is heavier and more expensive to ship, and aseptic cartons need new filling lines and alternate distribution logistics. For smaller brands with limited packaging portfolios, the capital expense to change formats can be cost-prohibitive.
The intended beneficiaries of the policy U.S. metal manufacturers might experience higher prices and margins in the short term. But evidence from both the 2002 Bush‑administration steel tariffs and Trump’s 2018 actions reveals modest long‑term returns in domestic capacity. The Federal Reserve Board discovered that the 2018 tariffs were concurrent with 75,000 fewer jobs in downstream manufacturing, while employment in the steel industry increased by only some 8,700 positions. Specialized tinplate manufacturing for cans has fallen by 75 percent since 2018, highlighting the structural divergence between tariff coverage and real capacity increase.
For shoppers, the arithmetic is merciless. A two‑ to five‑cent hike per can likely insignificant equates to a double‑digit percentage increase on a 42‑cent supermarket purchase. For families living on razor-thin budgets or SNAP benefits, those small increases snowball over a weekly shopping cart. In the words of David Ortega, a Michigan State University food economist, “Tariffs on inputs like steel and aluminum may not seem that connected to food, but they are critical for packaging.”
With no exemptions being granted to U.S. can manufacturers and retaliatory action from trade partners in the offing, firms such as AriZona have a shrinking number of choices: absorb the cost and cut margins, re‑engineer package lines, or pass the hike to consumers bringing an end to one of the longest-running price grips in American retail.
