Quick, someone check on the price of the Costco hot dog because the founder of the iconically priced AriZona Iced Tea says he's considering raising the price of the company's signature beverages due to President Donald Trump's tariffs on imports.
What, so tea is being tariffed? Nope, but aluminum from Canada is -- and at the rate of 50%. While the Trump administration believes that tariffs will force manufacturers to relocate to the U.S., experts say that recent hikes have put pressure on the beverage sector.
AriZona has maintained its 99-cent pricing for its "Big Can" drinks since the company was launched in 1997, and the company has expressed reluctance about potentially increasing the price.
But the reality is that AriZona uses more than 100 million pounds of aluminum a year for its cans, and about 20 percent of that comes from Canada. Founder and CEO Don Vultaggio told the New York Times he's hopeful that the tariff dispute will be resolved, but if it is not, he said, “at some point the consumer is going to have to pay the price.”
Representatives from the U.S. aluminum sector have warned about the negative consequences of the increased tariffs on domestic producers and food security.
“I hate even the thought of it,” Vultaggio told The Times, adding, “It would be a hell of a shame after 30-plus years.”
Companies like AriZona and Independent Can are contemplating price increases due to the tariffs, with some already raising prices to offset the additional costs imposed by the tariffs.
Fortune Magazine detailed how the aluminum tariff uniquely distresses beverage makers in the U.S., writing, "companies like AriZona have few ways to blunt the impact. Unlike industries with slow turnover, which can stock up on inventory before the tariffs hit, beverage makers move product quickly. That means the aluminum tariffs will immediately hit the company’s bottom line.
They added "the price pain comes with very little gain ... 'because "Companies like AriZona, which imports some aluminum but produces the rest of the product domestically, might decide to just package the product overseas to avoid the duty."