A Sad Chicken Noodle Soup Story

On March 2, 2018, the U.S. Secretary of Commerce showed CNBC viewers a $1.99 can of Campbell’s Chicken Noodle Soup. Hoping to convey the minimal impact of a 25 percent steel tariff, he said the can’s steel was worth 2.6 cents. As a result, a 25 percent steel tariff added just six-tenths of a cent to the cost of the can. In addition, he said the tradeoff would be “tens and tens of thousands of jobs created, and hundreds and hundreds of millions of dollars of capital investment…”

It did not quite work out as he expected.

Tin Can Costs

Our journey starts near Allentown, Pennsylvania. With 350 employees, the Can Corporation of America produces billions of cans. Knowing it makes no sense to ship empty cans, they need to locate in the U.S., near their customers. Because the rhythm of the plant has to parallel the seasons, they can fresh fruit and vegetables during the summer and soups in the winter.

Tinplate

In a tinplate can, the steel tariff hit the steel that is rolled with thin layers of tin. Because low-margin tinplate was a minimal moneymaker, domestic steelmakers produced less of it. Having to import more, the industry tried unsuccessfully to get lower tariffs, used thinner steel, and lobbied for higher tariffs on their competitors.

Tomatoes

As you might expect, our tinplate journey was only beginning. Next, we can travel to a farmer in La Crosse, Indiana. During a 2-month “surge,” the company that processes the farmer’s tomatoes temporarily hires 600 workers. During a 24-hour day, they can can more than 400,000 tons of fresh tomatoes. Their numbers were down, though, because more expensive cans diminished what they needed from the farmer by 10 acres (and 135 acres lower than the farmer’s ideal of 600). Still, though, the canner says it won’t cut what it buys from the farmer for now. Instead, what it does not can, it will make into ketchup, paste, and other products.

Steel

Continuing our tinplate journey, our next stop is Weirton, West Virginia.  Home of what had been one of the world’s largest tinplate makers during the 1970s, the Weirton steel plant had employed as many as 14,000 people. Now, though, after being acquired by Cleveland-Cliffs Inc. in 2020, the plant closed in 2024.

With imported steel dominating tinplate can production at the U.S.’s three active tin mills, our tinplate reflects the bigger plight of the industry. Relying more on the auto industry than cans, tinplate is just 1 percent of the U.S. steel market.

Our Bottom Line: Unintended Consequences

Thinking of our tinplate journey, our stops included canners, farmers, and steelmakers. Then, though, along the way, we could have named the workers employed by those businesses, their families, local grocers and restaurants, stockholders, and a ripple that spread to millions of individuals, households, and businesses.

The Butterfly Effect

Our sequence of unintended consequences displays the Butterfly Effect, where a small event winds up having a large far-off impact.

Or, as James Gleick said in Chaos,

So yes, we can have a President that tariffs steel. Affecting tin plate, cans, and Campbell’s, the result is a family that cannot afford its soup. According to the BLS Inflation Calculator, a 2018 $1.99 can of chicken noodle soup should be $2.69. Instead, today, it’s $3.49.

My sources and more: Because of our newly created Kent Place Bloomberg Lab, we get Bloomberg Markets (gated). A great resource- including today’s tin can story- Bloomberg Markets has ideal topics for my blogs and classes. Then, for some history, we returned to our tin can post.

Please note that ChatGPT created today’s featured image.