Interesting Times Well Underway
Two weeks ago, as John Roberts swore in President Trump, I sat down at my computer to begin work on a federal grant to promote Oregon hops. The two of us worked on our separate tracks, and I didn’t imagine that our paths would cross. They did, however, when Trump issued an order last week freezing all federal grants. In separate rulings, two judges put a temporary halt on the freeze, but it was still bizarre to be writing my first federal grant application at the moment the President of the United States was busy trying to revoke them. We sent the grant off on Friday (I was working with the Oregon Hop Commission on the grant), but even if it manages to get funded, who knows what happens next.
I’m not crying in my beer, though. These two weeks have been extraordinary in their lawlessness and chaos, and the loss of one funding source is very low on the list of wreckage currently directed at our federal government. As I write this, Elon Musk and a posse of children are rummaging around the databases containing the records of federal employees and apparently even control the Treasury Department’s payment system.
And then, of course, we have the tariffs.
On Saturday, President Trump authorized 25% tariffs on our neighbors and close allies Mexico and Canada, as well as additional 10% tariffs on China. These are our three largest trading partners, and our manufacturing system has in many cases become woven together thanks to decades-old free-trade agreements. Today, instead of raw materials and parts and finished products zig-zagging across the continent, we enter a trade war.
The production of beer is one of those manufacturing industries affected by the tariffs, and offers a nice case study in these interconnections. The US imports a huge amount of barley from Canada (11% of the total, I think), and our neighbors to the north reciprocate by buying a lot of our hops (80% of their imports are U.S. hops). And it’s not just raw barley; a number of breweries get their malt from Canadian malthouses like Gambrinus in British Columbia. In both counties, the beer is North American rather than purely Canadian or American
Looking south, Mexico doesn’t buy many U.S. hops, but they do ship us 40 million barrels of beer each year (more than 20% of our market, a far larger chunk than craft beer). You may think, “Meh, who cares if Modelo’s price rises, I’ll just buy Coors.” But keep in mind that a lot of American hands are involved in moving that beer around the country, storing it in warehouses, selling it to retailers, and making commercials for Super Bowls.
I am not an economist, so if you want good analysis about how this will impact the economy, the beer industry, your friendly, neighborhood brewery, or the price of a pint of beer, you’ll have to wait for the experts to weigh in. But it ain’t gonna be nuthin’.
Enormous changes are underway, and the stability of the U.S. government is no longer a given. Barley prices may seem like an incredibly mundane detail (picayune, even) to pluck out of this hurricane of news. But they are representative of the effects these disruptions will have. The price of barley is directly tied to the health of US businesses, jobs, and lives.
Most Americans do not care about strokes of pens in Washington, and as a result they fail to see the connections laws, treaties, and executive orders have to their daily lives. When so many things are happening all at once, drawing that causal relationship is all the harder. But those pen strokes do have real-world effects, and profound ones. It has just been a couple weeks, and already the firm ground beneath our feet has turned to quicksand. Our lives are about to change, though the particulars remain to be seen. In some cases it may be marginal, and others life-altering.
I slept fitfully and woke this morning feeling a dread I recognize from Spring 2020. Something bad is coming, but I don’t have the capacity to envision it quite yet. Things will become clearer in the coming days, weeks, and months, and I’ll try to keep you updated with the changes happening in the beer industry. In the meantime, good luck out there.
Update. Well, it appears that Trump decided to delay the Mexican tariffs today, less than 48 hours after announcing them. Good news, I guess, but it’s a hell of a way to run a country.