Trump Said Tariffs on Aluminum Would Boost Domestic Production. The White House Now Admits That Didn't Happen.
· Reason
When President Donald Trump first slapped tariffs on imported aluminum, the goal was clear: Increase domestic aluminum production for national security purposes.
The executive order Trump signed in March 2018 declared that aluminum was being imported in "such quantities and under such circumstances as to threaten to impair the national security of the United States." A Commerce Department report laid out the argument in more detail: If the U.S. found itself in a major war, it would need reliable supplies of aluminum (to make weapons, aircraft, and more) and should not depend on imports to meet that need.
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Tariffs, the administration insisted, would create the economic circumstances necessary for America to produce more aluminum.
A lot has happened since then. Aluminum prices have increased. A lot. Products made with aluminum—from beer cans to cars—have gotten more expensive as a result. Trump has raised and changed the aluminum tariff several times. The baseline tariff has gone from 10 percent to 25 percent, and there is now an additional 50 percent tariff on products made largely from aluminum.
But one thing hasn't happened. America is not producing more aluminum.
You don't have to trust the economic reports. Ask the Trump administration how its aluminum tariffs are working out.
"The domestic production and supply of primary aluminum, which is critical to the U.S. economy and defense industrial base, is still in insufficient supply," the president declared last month, citing information provided by Commerce Secretary Howard Lutnick.
Trump's solution, of course, is even more tariffs. In an executive order signed on July 20, Trump once tightened the rules for the aluminum tariffs and ordered Lutnick to stop granting exemptions to the tariff regime. The order includes a new carrot alongside the many sticks: Companies that invest in expanding domestic aluminum production can earn a reduction in tariffs.
After more than eight years of failure, you may want to be skeptical. As Supply Chain Dive, a manufacturing and logistics trade publication, notes: Applicants for the tariff relief program "are also required to submit information on major raw material sources and expected project milestones, necessitating intensive record-keeping to demonstrate ongoing compliance."
Here's a simpler idea. Admit the aluminum tariffs have failed and try something else.
It has been more than eight years since they were first implemented. If tariffs on aluminum were going to spur more domestic production, wouldn't that have happened by now? How many more ways does this policy have to be tried before it can be considered a failure?
The whole "national security" rationale for these tariffs never made much sense in the first place. About 70 percent of America's imported aluminum comes from Canada, a neighbor and close ally with which the U.S. had a trade agreement (until Trump tore it up). The idea that the U.S. would find itself in a war that cuts off aluminum imports from Canada has always been a stretch, and the fact that many major aluminum producers operate on both sides of the border makes it pretty silly to fixate on domestic supplies.
Admitting that these tariffs did not work and dropping them—at the very least, dropping them on imports from close allies and key trading partners—would make a lot of sense.
Doubling down on bad policy is always a mistake. The aluminum tariffs have plainly failed to achieve their primary policy goal. Even the Trump administration admits as much. It's time to accept that outcome, try something new, and stop hiking prices for American industries and consumers.
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