Issue

Canadian beverage manufacturers are being disproportionately harmed by U.S. aluminum tariffs and the removal of the de minimis exemption, which together impose unavoidable costs and administrative burdens on canned beverage exports that are not mitigated by CUSMA and cannot be avoided due to the lack of domestic beverage‑grade packaging alternatives.

Background

The Canadian beverage manufacturing sector is resilient, export-oriented, and deeply rooted in regional economies. However, the combined impact of U.S. aluminum tariffs and border policy changes now threatens its competitiveness despite full compliance with trade agreements. Targeted, time-limited federal supports are urgently required to stabilize the sector, protect Canadian jobs, and uphold the integrity of Canada’s trade and manufacturing strategy.

Canadian beverage manufacturers rely heavily on aluminum cans as their primary form of packaging, and more than 60 percent of domestically produced beer and a significant share of non-alcoholic beverages are distributed in aluminum containers.

While Canada is a major global producer of primary aluminum, it does not currently have domestic rolling mills capable of producing beverage-grade aluminum can sheet, creating an unavoidable reliance on U.S.-based processing and manufacturing.

Additionally, when the United States imposed Section 232 tariffs on Canadian aluminum and steel effective March 2025, and later increased to 50 percent on aluminum and extended to downstream aluminum products, including empty and filled beverage containers, it had a significant impact on Canadian industries, coupled with the challenge that these tariffs are explicitly excluded from CUSMA duty-free treatment.

Canadian beverage manufacturers exporting canned products to the United States are experiencing tariff stacking, high customs brokerage costs, and significant administrative burden despite full compliance with CUSMA rules of origin.

When the U.S. eliminated the USD $800 de minimis exemption effective August 29, 2025, resulting in cross-border commercial shipments being subject to full customs entry requirements, it created a disproportionate impact on small and medium-sized Canadian beverage producers who rely on frequent, lower-volume shipments.

This has caused additional costs with manufacturers spending a material portion of operating time and resources on customs administration, payments, and compliance rather than production, growth, and innovation, further compounding the already existing productivity challenges within our manufacturing sector.

Further, current Canadian tariff remission measures provide limited relief for imported inputs but do not address export-side cost escalation, lost competitiveness, or administrative burden. Without targeted federal intervention, these cumulative impacts threaten the viability of Canadian beverage manufacturers, reduce export activity, undermine rural and regional economies, and disadvantage Canadian firms relative to larger multinational competitors.

We recommend, the Government of Canada:

1. Create a temporary export tariff offset or rebate program for Canadian beverage manufacturers exporting aluminum canned products to the United States, calibrated to Section 232 aluminum tariffs paid on finished beverage containers.
2. Pursue retroactive bilateral and domestic targeted Remission Orders covering aluminum can sheet, empty cans, and lids used exclusively in beverage manufacturing.
3. Work with Export Development Canada to implement sector-specific support streams for beverage manufacturers impacted by tariff disruption, including, working capital guarantees tied to tariff-related cash flow strain, trade disruption insurance for cancelled or renegotiated U.S. contracts and advisory support for exporter-of-record restructuring and market diversification
4. Accelerate investment incentives for domestic aluminum rolling, can manufacturing, and alternative packaging innovation, including:
   • Strategic Innovation Fund and Net Zero Accelerator prioritization
   • Tax credits or capital cost allowances for beverage packaging infrastructure
   • Support for Canadian-made standard and non-standard can formats
5. Prioritize aluminum packaging and downstream manufactured goods in the upcoming 2026 CUSMA review, including:
   • Seeking carve-outs or quotas for beverage containers
   • Addressing tariff stacking on integrated North American supply chains
   • Aligning de minimis and customs modernization approaches for trusted traders

Date Drafted: January 2026

Date Approved: March 18, 2026