In June, Sen. Maggie Hassan sent public letters to grocery giants Costco, Walmart, Kroger, Dollar General, and Albertsons asking them to quantify the impact of President Donald Trump’s 50% tariffs on steel and aluminum imports.
In a statement, Hassan wrote that while experts have pointed to the possibility of tariffs in general driving up prices, “grocery retailers themselves have provided little public information about the potential harms of steel and aluminum tariffs.”
Now the Democratic senator is looking for specifics, such as how exactly the tariffs could disrupt supply chains, raise costs, and impact jobs.
Coming up with clear answers to these questions could prove a challenge, however, as many retailers simply don’t have a firm grasp on how steel and aluminum imports—or other material inputs for that matter—fit into their cost structures.
“The challenge, especially on the derivative side, is trying to figure out what the value of the steel or aluminum in that finished product is,” Jonathan Gold, VP of supply chain and customs policy at the National Retail Federation, told Retail Brew.
Figuring this out requires working with vendors to dig into supply chains and figure out where inputs are coming from and what their value is, Gold explained.
However, those intermediaries are facing their own challenges from Trump’s trade policy, and what shakes out price-wise for the consumer could depend on what kinds of deals retailers and consumer brands work out behind the scenes.
All about the cans: And in the spirit of the inquiry, it’s all about the details.
For example, how these tariffs impact pricing depends in large part on a single derivative product called tin mill steel, which is used to make the cans that package everything from soup and beans to aerosol hair spray.
Extrapolating from research it released in 2023—when the Biden administration’s commerce department was considering imposing antidumping tariffs in the range of 98% on tin mill steel—the Consumer Brands Association estimates the current 50% tariffs could raise prices 9%–15% and endanger nearly 20,000 jobs.
It’s also unlikely domestic producers will be able to pick up the slack. US-based manufacturers meet just 20%–30% of tin mill steel demand, according to Tom Madrecki, VP of supply chain and logistics for the Consumer Brands Association.
“The US steel industry doesn’t really make that steel,” Madrecki told Retail Brew, adding that “they don’t prioritize it,”—largely because they don’t find it profitable.
- Conagra Brands, maker of Hunt’s, Slim Jim, and Duncan Hines, revealed in a recent earnings call that it’s been forced to buy tin mill steel overseas due to the number of domestic manufacturing lines that have been eliminated since 2018.
Retail news that keeps industry pros in the know
Retail Brew delivers the latest retail industry news and insights surrounding marketing, DTC, and e-commerce to keep leaders and decision-makers up to date.
In other words, someone is going to have to eat the cost of the tariffs.
Saying no to cost increases: The question of which link in the chain bears the weight is still being worked out, and some retailers have taken a hard line on the matter.
In a letter to suppliers obtained by Fortune, Albertsons Head of Merchandising Omer Gajial stated the grocer’s position bluntly: “We are not accepting cost increases.”
As a number of retailers have stressed, keeping prices down is a top priority for much of the industry, and CPGs appear equally sensitive to price. “There’s going to be this inherent tension between retailers and CPGs about…who eats that cost,” Madrecki said.
Gold also acknowledged that it was getting difficult for retailers and vendors, even those with long-standing relationships, to work collaboratively, as it appears neither party can afford to stick it to the US consumer.
“Nobody wants to be seen on the wrong side of the consumer,” Madrecki added. “CPGs also don’t want to lose market share.”
The answer to this conundrum, Madrecki argued, is to look beyond just tariffs and explore other ways to drive the domestic manufacturing of products like tin mill steel.
“My hope would be that on both sides of the aisle, some of those inquiries…raising questions about the impact of tariffs leads to a more productive dialogue about how do we ensure adequate domestic capacity,” he said.