Trump’s Aluminum Tariffs: Doing What Tariffs Do

Scott Lincicome

From the Wall Street Journal comes a distressing tale of U.S. aluminum tariffs’ immense economic costs:

The tariffs have been unpopular with U.S. manufacturers that consider the duties a windfall for the U.S. aluminum industry. The tariffs drove up costs for beverage cans, car parts, window frames and other products.

And failed policy aims:

Reinstating the tariff on Canada attracted opposition from more than a dozen other aluminum companies including Alcoa Corp., Novelis Inc. and Arconic Corp. They urged the Trump administration to instead pressure China to stop what they say are unfair government subsidies that encourage excess aluminum production and drag down prices.

The tariff on Canada, those companies say, also won’t address higher electricity costs that put the U.S. at a disadvantage against other aluminum‐​producing countries.…

The U.S. aluminum industry has been divided over the tariff’s effectiveness at reviving domestic production since the start in 2018. While some idle production capacity at existing smelters reopened in the aftermath as prices rose, the increase in domestic prices was short‐​lived as global aluminum prices fell.

No new plants have been constructed in the U.S. in the past two years, and another smelter has closed.…

Century has reported losses for nine straight quarters and hasn’t posted an annual profit since 2017, a year before the tariff. The company has been buffeted by a combination of volatile prices for alumina feedstock that squeezed its margins and costs for restarting and expanding lines at its Kentucky smelters.

And political dysfunction along the way:

The Trump administration’s decision to reinstate tariffs on Canadian aluminum is a victory for one small U.S. company that out‐​lobbied competitors wary of imposing new barriers on a key trading partner.…

Chicago‐​based Century Aluminum Co., CENX +0.70% which had pushed hard for the original 10% tariff, lobbied for the restart of duties on Canada as a way to boost slumping U.S. aluminum prices.…

Century set up its own trade association in 2015 to push for the 10% tariff enacted in 2018. That group evolved into the American Primary Aluminum Association with startup Magnitude 7 Metals as an alternative to the Aluminum Association’s positions on tariffs. [Century CEO] Mr. Bless has become a key ally in the aluminum industry for the administration’s trade policies.

Alas, if only someone had warned us this could happen.