Aluminum Tariff Follies

The sordid reality of modern U.S. trade policy.

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Employees work at an aluminum factory on November 23, 2019 ,in Zouping, Shandong Province of China. (Photo by Tang Ke/VCG/Getty Images)

Hang around the trade game long enough and you’ll frequently encounter examples of how bad law, policy, and politics hurt American businesses in infuriatingly dumb ways. What’s going on right now in the U.S. aluminum market ranks up there with some of the dumbest.

I found myself deep in this particular rabbit hole thanks to Magnitude 7 Metals, a Missouri-based primary aluminum smelter whose sudden closure last month pushed Missouri Sen. Josh Hawley to demand that President Joe Biden use the wartime Defense Production Act to magically save the factory. As Reason’s Eric Boehm patiently explained shortly thereafter, the senator’s demand—in somewhat typical fashion—never made much sense because the DPA isn’t some sort of magic “get out of economics free” card that can fix whatever market event politicians don’t like. For Hawley to pretend otherwise is pretty ridiculous stuff.

Dig a little deeper, however, and this is more than just another case of a politician screaming “DEFENSE PRODUCTION ACT” out a Capitol Hill window like Michael Scott declaring bankruptcy. Instead, it’s another teachable lesson regarding the sordid reality of modern U.S. tariff policy, and the high costs, unintended consequences, gratuitous system-gaming, and failed objectives that too often accompanies it.

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  1. Mwj2009

    Scott -
    Thank you for this excellent piece. It should be required reading in economics classes as a case study of the contrast between (1) straightforward theoretical trade policy frameworks and arguments, and (2) the convoluted mess of actual trade policy implementation. The convoluted interplay of political influence, captured regulators, and unintended policy effects leading to counterproductive and at times absurd outcomes should be taught to and understood by far more citizens, and hopefully this piece helps. Well done.

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    Ben Connelly

    It makes one wish that all these confusing tariffs could be done away with. Wouldn’t it just be simpler if we got rid of them all? Then if there was anything that actually needed one, we could always put it back. But until we can lock this down and sort it out, we should just eliminate 100% of them!

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  3. SkyDoc

    Well, I was informed by one of America's leading intellectuals that trade wars are good and easy to win!

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    ReneFerrerJr

    Nicely done, sir.

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    Gibby

    I see articles being written about antitrust policy

    Might be time for Scott to tackle that topic next

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  6. Cpbogdan

    This piece should be required reading for anyone who think central planning is the way to go.

    Even if the intentions of the Planners are pure, there’s no way to anticipate all of the downstream effects of policy. Good grief - is it too early for a drink..?

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  7. Placid Paddler

    Unfortunately, to prevent predatory games by misbehaving sovereigns, we have to have tariffs. The “let them cut their own throats” policy proved to create too many victims and other problems.

    We need to stop arguing against all tariffs and argue against bad ones and old ones. How about we kill the chicken tax and fix the Jones Act to start?

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  8. Very Old Grumpy Guy

    I love Scott’s analysis, but I must confess that I struggle to read entire pieces. This has nothing to do with Scott’s writing, it is entirely due to the fact that reading about the idiocy of our trade policy makes me measurably dumber.

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  9. Mmorrissey001

    If we really want to help the aluminum industry, it sounds like we need to stop with the stupid tariffs and build inexpensive, reliable energy sources.

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    1. Placid Paddler

      “We” just need to stop being jerks to the energy sector in general. If there’s an industry that is even more likely to over produce to the point of losing money for itself, it’s US energy.

      Also, “We” need to stop killing pipelines. If a pipeline path is problematic, then government needs to help solve the path problem rather than tell the market players what to do.

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    C C Writer

    Well, that graphic in the "working while old" part is rather stereotypical. Geez.

    And I don't mean only the cane (c'mon, kiddies, they don't actually issue them to us at age 65), but also the briefcase. This goes to the other kinds of "where," the type of company and the location.

    I work part-time retail now, and would never go back to one of those downtown offices where you no longer get a workspace in which you can concentrate on your work but get jammed elbow to elbow with a roomful of people because it's supposed to be "collaborative" when it's really just a cheap way of saving on rent, and no wonder they're having trouble making people come back! (My side hustle is copyediting, and I can do that from home.)

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