The Wall Street Journal‘s recent editorial on how U.S. tariffs on aluminum imports are decimating the American American beverage industry serves at least one useful purpose: It makes clear that the newspaper’s editorial writers either don’t understand the importance of presenting data in context, or don’t care because they know the big picture would kneecap their argument.
According to this piece, these Trump-era levies show the dangers of trade barriers that “are a form of industrial policy that is really about favoring some producers at the expense of consumers,” and are fueling current inflation to boot. Their main evidence? First, that Since the tariffs were imposed in March, 2018, U.S. beverage manufacturers have “paid an equivalent of $1.4 billion in Section 232 aluminum tariffs through February 2022 [for the aluminum they use in cans”; and second, that this industry paid $463 million in tariff costs in 2021 alone.
The fueling inflatio argument can be dispensed with easily. In 2021, the U.S. economy produced just under $23 trillion worth of goods and services before factoring in inflation. (I’m using pre-inflation data throughout this post because that’s the gauge used by the Journal for tariff costs.) The non-durable goods sector (in which beverages are found) generated $3.455 trillion. As anyone can see at a glance, $463 million as a percentage of these totals is miniscule – to put it charitably. Its percentage of the non-durable goods sector alone is just 0.013. And these added costs are moving the needle on overall U.S. inflation exactly how?
But even when you look at the beverage industry by itself, the inflation and cost burdens fade into insignificance. Although official data are hard to find, this source pegs the sector’s total U.S. sales at $253.42 billion. The $463 million in tariff costs represents a grand total of 0.18 percent of that total. If the industry finds that amount crippling, or even noteworthy, it desperately needs new management.
More detailed data are available from individual corporate reports, and point to the same conclusion. This Yahoo Finance item presents the top ten beverage companies operating in the United States by revenue. Add up the figures and you get a $174.09 billion total for last year. The tariff costs as a share of that sum? A thoroughly unimpressive 0.27 percent.
But what about the all-important bottom line? The individual corporate reports of these publicly trade companies reveal this figure to have been $36.74 billion in 2021. The aluminum tariff costs come to 1.26 percent of that total. No one can blame companies for wanting to make every single dollar of profit they can (lawfully), but do the Wall Street Journal editorial writers really believe that the executives of these firms can’t compensate by increasing efficiency? If so, can them all. (Pun intended.)
Finally, the corporate reports also show the total costs incurred by these ten companies in order to produce their products. Last year, they amounted to $76.77 billion. So the tariff costs increased this amount by 0.60 percent. Again, this is worth a pity party?
The Wall Street Journal editorial board — like everyone else — has a perfect right not to like any and all tariffs, on aluminum or anything else. It also has a perfect right (unless you don’t believe in freedom of the press) to cherry pick the facts to make its case. But readers and others also have rights — including the right to know when a publication is using Fake Commentary tactics like this to make its case, and to wonder whether, if this is the best this staff can do to discredit tariffs, any solid grounds to oppose them exist at all.