You can’t increase exports if you are the highest cost manufacturer.
The Metals Lobby’s Big Steal
The Wall Street Journal discusses The Metals Lobby’s Big Steal
Multiple press reports say that an agreement to avert a 50% U.S. tariff on $20 billion in Canadian goods broke down last week in part because of objections by the U.S. steel and aluminum lobbies. The mooted deal would have reduced those tariffs on Canadian steel and aluminum to 25% from 50%.
Call it a case study in how a narrow special interest calls the tune for the rest of the American economy. The current U.S. tariffs on metals date to Mr. Trump’s first term, originally set at 25% for steel and 10% for aluminum, in the name of national security. But his first Administration exempted Canada and Mexico to mitigate the damage to downstream U.S. users in manufacturing and construction.
Soon after taking office for a second time, Mr. Trump removed these exemptions, later raising the tariffs to 50%. After U.S. manufacturers that use steel and aluminum complained that the taxes made them less globally competitive, he imposed a 25% tariff on so-called derivative imports that contain the metals. Who knew stainless steel pots were a national-security threat?
These sky-high border taxes have caused U.S. aluminum and steel prices to soar. The price premium for U.S. aluminum over the global benchmark has increased five-fold since Mr. Trump took office a second time. Americans are now paying roughly 75% more for aluminum than the rest of the world. Steel prices in the U.S. are also about 64% higher than in northern Europe. One reason these differential are larger than 50% is because the metal tariffs are stacked on top of other tariffs on China, which is the world’s largest producer of steel and aluminum.
By the way, President Trump admitted Monday that the U.S. needs aluminum from Canada—contrary to his social-media post the same day. “This country desperately needs aluminum,” Mr. Trump said during a telephone rally for a GOP candidate in Oklahoma. “We don’t have it. We get it all from Canada for the most part, and we need it badly.”
How Trump’s Protectionism on Aluminum Works in Two Pictures
On April 19, 2026, I explained How Trump’s Protectionism on Aluminum Works in Two Pictures
In just the last few years, primary aluminum smelters in Washington, Missouri, and Kentucky have each shut down, and production has declined. Now, only four smelters are in operation, just two at full capacity. And this contraction occurred despite tariff protection expressly intended to boost output.
Canada has long been America’s largest aluminum supplier, thanks to abundant hydroelectricity that gives its producers a decisive cost and environmental advantage. Canadian aluminum is also deeply integrated into US defense supply chains because the nation is a close ally that was officially made part of America’s Defense Industrial Base in 1993. With Canada specializing in primary smelting and the US focused on downstream fabrication and manufacturing, bilateral trade and investment flourished.
Comparative advantage was working exactly as advertised – until we blew it up.
Reflections on Comparative Advantage
The US cannot compete with Canada on either raw minerals or aluminum manufacturing.
But economic realities do not stop Trump. As a result of his inane tariffs, the US pays roughly 75 percent more for aluminum than the rest of the world. Production declined.
Moreover, the energy demands of aluminum are intense. The smelters will have to compete on electricity with all of the data centers now under construction.
It makes as much sense to compete with Canada on Aluminum as it does to compete with Thailand and Indonesia in natural rubber production.
Nonetheless, Lutnick wants all auto supply chains in the US.
Did Howard Lutnick Purposely Wreck the Trade Deal with Canada?
On August 24, I asked Did Howard Lutnick Purposely Wreck the Trade Deal with Canada?
Understanding the Setup
- The US has two negotiators, Commerce Secretary Howard Lutnick, who oversees the so-called Section 232 sectoral tariffs, and US Trade Representative Jamieson Greer.
- The consensus opinion was that a deal was close. Carney thought a deal was close. Trump announced a deal, arguably a huge red flag.
- There was a last minute dispute over tariffs on light trucks. It’s possible this was a simple misunderstanding. Each side may have had a different understanding of autos.
- The killer was two last minute demands by someone on the US side. The first pertained to Canada’s ability to make deals with other countries. The US wanted restrictions.
- The second last minute demand by the US sought to curtail the use of French, one of Canada’s two official languages. This dispute pertains to digital services and US-based streaming services and levels of French-language content.
- Canada’s ambassador to the US, Mark Wiseman, likened the negotiations to a handshake deal to buy a house — only for the prospective buyer to learn appliances weren’t included, the furnace had no warranty and neither the garage nor yard is on the same property
Point three in and of itself was a sensitive situation. Then out of the blue came demands four and five.
Point four alone was sufficient for Canada to walk away. No nation would agree to that.
Lutnick and Greer both had to understand that as well. So, what’s the point of making those last minute demands unless it was to purposely kill the deal?
Lutnick’s Goal Is Clear
Consider this snip from the Wall Street Journal.
If the tariffs are implemented, a 50% levy could drive automakers to close factories in Canada, particularly if the U.S. eliminates tariff rebate programs based on automakers’ use of U.S.-made parts. Auto parts regularly cross the U.S., Mexico and Canada borders multiple times before being put in a vehicle. Commerce Secretary Howard Lutnick, whose agency administers the tariffs, has said he wants to bring many of those supply chains to the U.S.
Four Incompatible Ideas
- Create Fortress America
- Reduce Inflation
- Increase Exports
- Increase Tariff Revenue
Tariffs increase costs. If you succeed on point one, you immediately fail on points 2 through four.
Related Post
August 25, 2026: Canada Retaliates and Trump Threatens to Rename Lake Ontario
Trump makes a threat he cannot even keep.
Trade wars do neither side any good. We have them because someone starts a trade war, Trump in this instance, and political necessity demand retaliation.
An overwhelming percentage of Canadians wants Carney to respond. So he did.
It is absurd to be in this spot, but here we are.
Americans may be losing on every sale.
But POTUS says they will make up- the difference with volume.
Canada and the US have had a great trade relationship for over a hundred years now. And it’s been a fantastic relationship for the US. Canada sends us their raw materials at decent prices, and we transform them into high priced finished goods that we sell back to Canada and the rest of the world. Low cost inputs from Canada are actually an advantage for US manufacturers, allowing them to compete internationally.
In addition, Canada has allowed US companies to set up shop in their country to take advantage of the cost advantages. Ford, GM, US Steel, Alcoa, etc all have facilities in Canada that they profit from.
For some reason, Trump wants to shut down Canadian auto manufacturing, steel and aluminum industries and bring those industries back to the US, even though they are mostly American owned faciltities already. Bringing back these industries would only raise costs and our companies would soon lose their competitive advantage.
So Trump puts tariffs on the output of these industries, which drives up the cost to American manufacturers and makes them less competitive immediately. Aluminum is a great example, as pointed out by Mish.
Perhaps Alcoa can sell their low cost Canadian smelters to the Europeans, Japanese or Chinese. Alcoa can then spend billions to build new aluminum smelters (that would take 10 years to build) in the US that could not possibly compete against the ones they sold.
Repeat the same process with steel and autos.
It’s madness.
Side note: there are two provinces that still sell US spirits; Alberta and Saskatchewan. Apparently sales of US alcohol in Saskatchewan have declined 40% since Trump began his tariff war on Canada. And now, Saskatchewan is going to put a 50% provincial tax/tariff on US alchohol, which will only cause further sales declines.
it is certainly madness. much of history of empires has episodes or madness and can ruin those empires. as you say so often, what is the best way to profit off this dumb move by our people’s choice, donald.
Thanks Papa! I’ll drink to that!
Yup, this situation make no sense.
In addition I would think the long run effects of this would be for Canada to develop more the material transformation activities at home, since they have a cost advantage on the input materials. They are then going to compete more internationally with the U.S. in other areas.
I keep saying Carney needs to get on with things. Build something. Canada needs pipelines to tidewater and refineries. Interprovincial transmission lines. Once you get the infrastructure built, Canada has some natural advantages that would make them very competitive globally in many manufacturing areas. If you have free trade/integrated economy with the US this is not needed. If you do not, then the whole situation changes.
Not saying any of this is good/makes sense, but from a Canadian point of view it will be very difficult to have the same level of trust in America. We need to do what we need to do.
Correct me if I am wrong, but if China is intentionally producing a commodity for the express purpose of lowering the price to capture the market, while we MAY be paying a higher nominal price in the short term, we are avoiding the price of long term reliance on an entity not interested in our best interests. Isnt the whole hollowing out of multiple industries over the last few decades proof enough of the costs (risk) or doing so? Pharmaceuticals, rare earths, chips, etc etc etc…. Im not sure the fact that much of the world is “victim” (yes, if they want to dump at low cost….why not), makes the argument that this is a bad thing. There is more to an “Economy” than the mere availability and price of a commodity….no?
You are assuming that US based companies will spend the billions needed to build new aluminum producing facilities.
They of course, will never do that. Those tariffs may go *poof* in the middle of the night with a POTUS post on social media.
You can depend on Taco to do that!
And who *is* interested in our best interests?
The continuing failure of taconomics reported on a daily basis.
As Scaramouchi calls him “Howard Buttlick” b/e he blindly sucks up to Trump.
the mooch. talk about suck ups. all great corporate leaders like hedge fund owners or CEOs are suck ups. it’s how to get ahead in pax dumbfuckistan. anything for a few extra shekels. really twisted in the rich world as the lifestyle difference of a billionaire and a middlebrow is not that much. everyone has access to good food, heat, good shoes, winter coats and endless entertainment a king or queen of a few decades ago could only dream about.
He is as genuine as his fake tears at Cantor Fitzgerald after 9/11.
Trumps tarrif actions indicate democracy is dead. Why aren’t republicans speaking out against this madness? Do they think trump will send the DOJ after them?
My guess is that everyone in the US government is now pro-inflation (no matter what their rhetoric says). Inflate away the US debt, is the plan. Almost every single politician is on board with this.
It’s also a clever way of crushing the bottom 50%, as most of them have no real assets. Those ,particularly in the top 10%, will see their assets rise in price. Many people will work harder and get less.
I read something a few years ago that followed your point on inflation. It basically prophesized that the American public would beg for inflation and from what I see we may be at that point. There are a lot of winners from inflation, think homeowners with mortgages, and lets not get into the government. Regarding the bottom half…well they inevitably will have welfare for them.
“Regarding the bottom half…well they inevitably will have welfare for them.”
Serfs and peons don’t get welfare.
Well as Bill Clinton might sat “It depends on how you define welfare.” SNAP, LiHeap, no cost school meals, etc etc blah blah sound awful welfarist to me…it’s all in the definition
Carney ready to talk once Trump stops being a goober
https://www.jalopnik.com/2243636/trump-50-percent-auto-tariffs-disastrous-usa-canada/
Haha gober.
Trumpstien’s gooberitis will only worsen.
Understanding Iranian VictoryIranian Strategic Logic and Why Tehran Believes It Has Already Won
https://rbaganalysis.substack.com/p/understanding-iranian-victory
I am not American, nor do I live in the United States.
Over the years, I have had thousands of discussions with Muslim extremists, and I came to believe that fanaticism had reached its ugliest possible form.
Then I encountered Trump’s most devoted followers.
And I realized I had been mistaken. Fanaticism is not the property of any religion, nationality, or political movement. At its core, it is always the same: the surrender of reason, judgment, and even self-interest to an unquestionable idol.
For the Trump fanatic, no fact is quite powerful enough to challenge the faith. No matter what Trump says, does, contradicts, or gets wrong, the conclusion is predetermined: Trump is right. He is treated less like a politician who can be questioned and more like a prophet whose words must be interpreted, defended, and obeyed.
And the tragedy is that the people most fiercely defending him may be the very people paying the price for his actions. While their lives become harder, their communities fracture, and their frustrations deepen, the man they defend continues to turn political power into personal opportunity and profit.
Yet even that seems incapable of breaking the spell.
Because once politics becomes faith, evidence becomes irrelevant. Contradictions become tests of loyalty. Failure becomes someone else’s fault. And the suffering of the believer becomes proof not that the prophet was wrong, but that the believer must believe even more fiercely.
That is the most disturbing thing I have learned about fanaticism: it does not matter who the prophet is. Replace the name, the religion, the ideology, or the flag—and the psychology remains remarkably the same.
The fanatic does not ask, “Is he right?”
The fanatic asks, “How can I prove that he must be?”
And so, no matter what happens, no matter what is lost, no matter how badly reality contradicts the belief, one answer remains sacred:
Trump is always right.
correct. that is anthropology 101. i learned that in 1978 frosh year a SUNY Albany
Stupid monkeys…
You’ve just explained the success of Hitler, Stalin, Mao, etc. There seems to be a genetic defect in various branches of human DNA that lead to these conditions.
https://www.pewresearch.org/short-reads/2013/12/09/study-on-twins-suggests-our-political-beliefs-may-be-hard-wired/
In a nutshell, people that consider themselves as “conservative” are built to be mindless slaves. If it’s not a religious leader, it’s a political one because these nitwits need someone to tell them what to do. Lower educated, followers not leaders, prone to violence, etc.
AFAICT, the problem is not limited to any political tendency. It is a part of the human condition.
exactly. human primates have been wired by evolution to follow a silverback who will protect the troop.
Least with muslims you have a hundred virgins or something like that at the end of the line. For whatever thats worth.
I prefer experienced women who know how to have a good time. But to each his own I guess.
worth about as much as when a young mother tells you she is a virgin.
Interesting that Trump’s most devoted followers are also America’s most religious people. And once you’ve decided to live life based on faith instead of knowledge, that faith can lead you into all kinds of mistakes.
I give credit to all those who do the tough recognizance behind enemy lines via their Zenith Flash-Matics.
“Because once politics becomes faith, evidence becomes irrelevant. Contradictions become tests of loyalty. Failure becomes someone else’s fault. And the suffering of the believer becomes proof not that the prophet was wrong, but that the believer must believe even more fiercely.
That is the most disturbing thing I have learned about fanaticism: it does not matter who the prophet is. Replace the name, the religion, the ideology, or the flag—and the psychology remains remarkably the same.
The fanatic does not ask, ‘Is he right?’
The fanatic asks, ‘How can I prove that he must be?’”
The term you may be looking for is “Cognitive Dissonance”.”
The massive James Bay hydroelectric project in Quebec powers the aluminum smelters. Would have been a great place for AI infrastructure as well.
still a good place for them, perhaps. i’m sure if they pencil out by accountants at AI companies it will happen.
Economic mismanagement by central planning was performed in the Soviet Union by their politburo. Here in the USA it is done far more efficiently by a single individual.
ha ha ha. i did business in russia post 1991, with pals who had defected in the 80s. what a fun time………..we had oligarch clients. amerika seems like we are headed for a crackup. 50 state solution when states will refuse to remit money to DC imperial city.
Good. I want to watch the faith based reality of the red states disintegrate when they stop getting money from blue states.
Stupid SHOULD hurt.
This is squeezing the margins in my aluminium foil hat business.
ha ha ha. i take lots of art classes over the decades. all mediums. marble to wood to painting and ceramics. i’ve seen many a young and funny artists make wonderful tin foil hats. they might be a great Xmas gift this year.
i’ve bet a few pals last year Howie L would be the man to take down trump. study the man’s entire life and you might see it. make amerika scream in economic misery in the heartland and his old pals from cantor will make buckets of shekels. i met old howie when we were both college kids. he’s a demon. who plays dumb.
How long will the US continue to claim control of the Strait of Hormuz by deploying military assets in the Arabian Sea, amid challenging supply chain conditions, since, according to many media reports, US military bases are being destroyed (by Iran) from friendly Middle Eastern countries? If Iran and Oman allow shipping traffic to go through by paying some fees, won’t Middle Eastern countries just align with this deal in their best interests, ignoring the so-called US naval blockade of the Strait of Hormuz? https://economictimes.indiatimes.com/news/international/world-news/iran-oman-reach-deal-on-strait-of-hormuz-revenues-irgc/articleshow/133540840.cms
Donald Trump: the only President brilliant enough to waste hundreds of billions of American taxpayer dollars, driving up the deficit and national debt, only to massively increase gas prices for American citizens.Those MAGA folk sho be smart!
Yes, but the Epstein Files stayed out of the news, and that is all that counts.
Mission Accomplished!
If Trump thinks Canada is a terrible trading partner and “we don’t need them” then he should just shut down all trade with Canada. Actually, Canada should just do it and move on.
Actually, that is their plan and they have said it out loud. But you won’t find it here. You’ll have to seek foreign news sites.
Is the ultimate goal crippling Canada so that it has no choice but to become a de facto US state?
As docile and complacent as we are, we are not naive enough to join a country run by your current leaders. The US can cause enormous economic damage but never enough to make us stupid.
We are setting course and I doubt your next administration will do enough to change that.
The US used to be great but the rot and corruption inside every government (ours included) eventually sets itself loose, and once it feels the power, it can’t be stopped.
It was good while it lasted. Bye bye.
“The US used to be great but the rot and corruption inside every government (ours included) eventually sets itself loose, and once it feels the power, it can’t be stopped.”
Power selects strongly for sociopathy. Whatever else sociopaths do, they are ever always only in it for themselves alone.
docile and complacent, well educated and compassionate. chess players not tic tac toe. Trump does want to control Canada but he is a fool Integrating Canada would destroy Maga and republican party. Bernie would be a moderate here.
Also can you imagine a republican governor taking the stance Ford (conservative party) takes to support Carney (liberal party)
Canada Rocks Elbows Up
The U.S. aluminum market is influenced by global pricing, which can fluctuate based on international supply and demand.
It’s also influenced by the insane tariff and energy costs in the USA. No one else in the world has to deal with that
“ The U.S. aluminum market is influenced by global pricing, which can fluctuate based on international supply and demand.”
Correct. US manufacturers generally have to pay the same price for aluminum as their international competitors.
Then add a 50% tariff to that price at the border. So much for our manufacturers being competitive.
Trump is not acting in the interests of Americans. He is frightfully stupid. January after the new politicians are seated it will be high time to impeach him and set America free.
– Trump is not acting in the interests of Americans.> It’s not his call, but rather a Global call, of which Trump has very little control over.
– He is frightfully stupid. > Because he can’t control the Global Decisions being made?
– January after the new politicians are seated (2 or 3 won’t change much), it will be high time to impeach him and set America free. Trump is not going anywhere soon, as he is in full control of what he is achieving, and going after. It’s called Peace & Security. If He continued the Biden / Kamala way, which he did NOT thank goodness, then I would agree…
Maybe that’s why Kamala is pretty much a laughing stock now, as is Biden, but at least he had an excuse…
“He can’t control global decisions”
”he is in full control of what he is achieving”
I think you are right in that you can’t fix stupid.
Extra points in Magaland for mentioning Biden
It’s pronounced “buh but BIIIIIIIDEEEEEN”
How to prove you’re the dumbest student at Wharton…
I think the plan is to create a lot of destruction and chaos at every level and create a nanny state to protect citizens from … Government
Biden & Kamala had their shot, and failed miserably, because it was a ridiculous effort of anti American actions. Open Borders hurt our Country immensely, and it will be decades before it’s back under normal control. Sure we stopped the bleeding, but Kamala and Biden left one gaping massive mess to clean up!!!
Well brace yourself. When democrats take congress and then the presidency, you’re going to have open borders, DEI, LGBTQ soup, trans-for-everyone and whatever else you don’t like back in vogue and on steroids.
The only question you have to answer for yourself is, “what did you get for all the pain & suffering you endured?”
…and then Republicans will once again blame all D malfeasance on “socialism”, instead of “sabotage”.
yes the .09% of the people that are trans are the real problem Jezzuz people are stupid
It’s gays from the 60’s-70’s all over again. They were blamed just like the trans are being.
The blacks! The gays! The trannies! There were none of those back when America was great!
I had no pain or suffering in regards to this issue. I don’t live near the borderline being crossed, and although I deplore it, I cant do anything about it. I also don’t live in a major City, so it’s much quieter here, with no protest, law breakers or any shenanigans. We do take care of ourselves however, so plenty to deal with if they com, but they know better. Cities are where they get food, money, a street to live on, and goodies from the people who run the cities, thinking it will make them nicer…
Why do you ask? Did you have problems, because if I recall, you moved recently? Better where you are now?
Democrats want to make everyone transgender? On steroïds even? I guess that combo makes sense in a way…. But that’s news for sure. And god forbid we have to deal with LGBTQ soup, instead of new wars, insane corruption and masked cops shooting people in the streets.
The border was a Biden failure. And when he wanted to act republican congress blocked it. There’s also zero chance democrats will make that mistake again.
My point is democrats will be as useless as GOP, focusing on esoteric issues rather than those hitting everyday Americans. They will do nothing about inflation, debt, deficits, social security, medicare, or anything else but token measures. Biden kept Trump’s tariffs from his first term, how has that worked out for everyone?
But go ahead and dream about “Hope” or whatever the next slogan will be. And I’m on record that as useless as dems are, they are still better than the awful GOP but that’s not saying much in this day and age.
In Biden’s defense, he did inherit a destroyed economy after Trump’s first term and had to focus on rebuilding supply chains and bringing down exploding Trump inflation.
yes look at the m1 the inflation was caused by trump 4t in january of 2020 and 16 t may 2020 biden helped later but Bidens inflation was caused by trump Everyone should be taught there is always a delay between cause and effect.
https://tradingeconomics.com/united-states/money-supply-m1
Trump had to spend 2 Trillion, due to Covid (Cares Act) alone, and that was only the first big chunk of much more to be spent. He had massive worries and expenditures unlike most in our Countries history.
“But Biiiiden!”
Get fucked
I guess you dont have Stu on “ignore”.
Nope
Wow! You really and Truly Admire Biden! Go get him then, his wife won’t stop you, or anyone else for that matter. He is all yours!!
Kamala Harris forced poor widdle Trump to impose stupid tariffs?
No silly, she was open borders, free money, housing, medical, vision, Computers, School etc.
You are trying to change the subject. Even if what you said regarding Harris were true, she didn’t force Trump to enact stupid tariffs.
Like my dad used to tell me: You can’t fix Stu.
actually much of what republicans are taking credit for Biden did. Biden was a fool because he thought he was going to live forever same with RGB they have some responsiblity for the mess. but it will end with America waking up and going the rest of the 1st world in becoming democratic socialist.
Not while the schools keep kids uneducated on anything to do with society and history.
I hope you’re wrong, for my children’s sake. I may see it, from upstairs perhaps… I see no reason why this could happen just yet. I actually don’t ever see it happening, but I could be very wrong indeed, as it is being pushed like hell! I think in the end cooler heads and minds will take control.
Who’s RGB?
My word, in the face of all Trump’s failing, we still want to try and blame Biden? And that sad “point” is all you have to defend the current level of stupidity from the white house? Well, you certainly pass the Maga loyalty test.
“Blame Biden!” is all they got. Biden blamed Trump. In his first term, Trump blamed Obama. Obama blamed Dubya….
Out of almost 8 billion people on the face of the earth, there only two beings born with dicks and balls who are trying force their way into the all-girls showers in the WNBA locker rooms, and they’re both conservative Republicans, and one of them has Matt Gaetz for a lawyer.