Minnesota beverage company growing but rethinking $3.5M expansion because of economy

Big Watt Beverage Co. is planning a $3.5 million expansion of its canning plant operations, but could pull back if the federal budget bill goes through as planned and aluminum and steel and Chinese tariffs remain high.

The tariff question makes the idea of expanding “a little bit of a nail-biter right now. Things are just too uncertain,” said Lonnie McQuirter Jr., who was lobbying Congress last week in Washington, D.C., with the National Retail Federation and returns in a few days for a second round.

McQuirter owns the 36 Lyn Refuel gas station in Minneapolis and co-owns with six partners Big Watt’s canning plants in south Minneapolis and New Richmond, Wis., where there are plans for the expansion.

The plants can coffee, water and other beverages infused with caffeine, THC or CBD, for third-party customers.

The kicker is that co-packing orders are growing, signaling the need for expansion. But new costs and the uncertain economic outlook worry the small business, McQuirter said.

A new survey conducted by Minneapolis-based U.S. Bank of 1,500 firms with revenue of $25 million or less found many firms in the same predicament.

About 88% of those surveyed reported growth during the past year, up from 73% last year.

More than half of respondents were “very concerned” that President Donald Trump’s tariffs would increase their production costs 1% to 10%, said Shruti Patel, the bank’s chief product officer of business banking.

“That’s a pretty high uptick in terms of the margin pressure they’re going to experience,” she said.

Many respondents said they would have to pass on tariff costs to customers. Others will streamline operations, adopt new technology including AI tools and make deliberate decisions about their future, Patel said.

For Big Watt, one of those decisions will be around the planned expansion.

Trump increased aluminum and steel import taxes to 50% last month. And tariffs on the canning equipment McQuirter planned to import from China are 30% today but could change again if the temporary pause expires in August without a deal. If that happens, the China tariffs would spike to 145%.

His partners are scrambling to figure an alternative to importing equipment. They are looking for used canning equipment because it may already be in the U.S.

Other Minnesota small-business owners also are lobbying Congress, asking help for everything from trade tariffs and the farm bill to health care costs and tax credits.

Some small businesses, including those surveyed by U.S. Bank, still generally agree with the direction the Trump administration is taking. Even if they are lobbying for exemptions or lower levies on some goods, many said they generally agree that select tariffs in certain industries could positively impact their businesses by heightening demand for U.S.-made products.

The U.S. Bank surveyed businesses around the country in March, April and May.

“This year’s research captures a pivotal moment for small-business owners,” Patel said.

Factory exports fell 6% to $6.3 billion during the first quarter of this year, DEED said on Friday.

Nationally, exports rose and imports fell in April. May results won’t be released for a few weeks.